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 The Financial Stability Board (FSB), an international organization responsible for overseeing the global financial system, has developed a comprehensive global regulatory framework for cryptocurrencies. 
 The guidelines have been presented to the G20, which represents the 20 leading economies worldwide. The framework is built on the principle of “same activity, same risk, same regulation.” 
 On July 17, the FSB released a public note and two separate guideline documents. 
 These documents comprise high-level recommendations for regulating cryptocurrencies in general, as well as revised recommendations specifically focused on “global stablecoins.” 
 The latter refers to stablecoins that have the potential for cross-jurisdictional usage. 
 The FSB emphasizes the importance of segregating clients’ digital assets from the funds of crypto platforms and maintaining clear functional separation to avoid conflicts of interest. 
 Cross-border cooperation and oversight by regulators are essential in ensuring the effectiveness of these measures. 
 While acknowledging the value of privacy, the FSB urges local regulators to ensure that activities related to decentralized finance (DeFi) protocols do not hinder the identification of responsible entities or affiliated entities. 
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 The recommendations state that authorities should have access to necessary data to fulfill their regulatory and supervisory mandates. 
 Regarding global stablecoins, the FSB highlights the need for stablecoin issuers to establish a “governance body” consisting of identifiable and responsible legal entities or individuals. 
 Issuers are expected to hold reserve assets in a minimum proportion of 1:1 unless they are subject to prudential requirements equivalent to those imposed on commercial banks. 
 One notable addition to the guidelines is the potential requirement for global stablecoin issuers to obtain permits to operate in each jurisdiction. 
 The FSB states that GSC arrangements should not be permitted within a jurisdiction unless they meet all regulatory, supervisory, and oversight requirements, including obtaining affirmative approval. 
 The FSB plans to assess the worldwide implementation of its recommendations by the end of 2025. 
 In September 2023, in collaboration with the International Monetary Fund, it will submit a joint report on existing policies and regulatory issues to the G20. 
 In alignment with the FSB’s stance, the Association for Financial Markets in Europe recently urged European Union lawmakers to incorporate decentralized finance (DeFi) into the first EU-wide crypto framework, referencing the FSB’s position on the matter. 
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FSB Proposes Global Regulatory Framework for Cryptocurrencies

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