[1/2]Cryptocurrency representations are seen in front of the words 'Cryptocurrency Market' and the falling stock chart in this illustration taken on November 10, 2022. REUTERS/Dado Ruvic/Illustration/
LONDON, July 17 (Reuters) - Globally agreed rules leave cryptocurrency firms with no choice but to introduce basic safeguards to prevent blowouts seen on the FTX exchange and other cryptocurrency victims, the Board of Trustees said on Monday. G20 Financial Stability.
The FSB on Monday published the final recommendations requested by the G20 on the supervision of companies that trade crypto assets such as bitcoin. The watchdog also revised its existing recommendations for stablecoins in light of the demise of the TerraUSD/Luna coins.
Both borrow universal railings from mainstream finance before the sector grows large enough to pose a threat to financial stability by focusing on strong governance to avoid conflicts of interest and proper risk management and disclosures to ensure that money of the client is separated from the cash of the company.
โAs recent events have illustrated, if ties to traditional finance were to grow further, the spillover effects of crypto-asset markets on the broader financial system could increase,โ the FSB said.
the collapse of FTX in November 2022 He highlighted the vulnerabilities of crypto companies, and the FSB said that all countries should implement the recommendations, even those that are not members of the watchdog. FTX was based in the Bahamas, not a member of the FSB.
"Therefore, crypto asset players must stop operating outside the regulatory perimeter or in breach of existing rules," FSB Secretary General John Schindler told reporters.
"These players can no longer argue that there is a lack of regulatory clarity, as our framework clarifies the standards that need to be applied." Schindler said.
Bitcoin has hit 13-month highs as the sector recovers from last year's slump, buoyed by a historic legal victory to Ripple Labs Inc on Thursday, which had challenged regulators over how far the tokens should fall under US securities law.
The European Union has already approved the world's first comprehensive set of rules for crypto-asset markets, but the FSB's "global baseline" minimum standards are designed to accommodate jurisdictions that want to go further.
The FSB rules are expected to become more granular with further action from the Basel Committee and IOSCO, the supervisors of global banking and securities.
IOSCO proposed in May the first comprehensive approach to regulate the daily operations of the crypto market.
The FSB, whose members commit to applying the agreed rules, will review how they are implemented by the end of 2025.
Reporting by Huw Jones, Editing by Louise Heavens
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