Source: www.ledgerinsights.com
Yesterday, the Financial Stability Board (FSB) had its plenary meeting in Basel where one of the topics was crypto assets and the collapse of the FTX cryptocurrency exchange.
He noted that the crypto asset sector has remained relatively separate from mainstream finance thus far, but that is changing rather quickly, creating increasing risk.
Second, he noted that crypto exchanges like FTX tend to merge various roles that are deliberately separated into TradFi and steps need to be taken to address this. Specifically, they referred to “risk concentrations, conflicts of interest and misuse of client assets.”
This has created additional urgency for the FSB and others to formulate a global regulatory and supervisory framework.
The FSB also noted the rapid growth of DeFi and that some of the solutions replicate similar functionality in TradFi. Our observation is that TradFi institutions are becoming more interested in using DeFi.
As a result, the FSB plans to put more effort into monitoring this aspect of the crypto-asset sector for vulnerabilities.
In October, the FSB outlined some high-level proposals for crypto asset regulations and opened a consultation that ends next week.
Meanwhile, the Basel Committee on Banking Supervision is finalizing the Basel Rules for crypto assets, which will greatly influence the degree to which banks can engage with crypto assets. The rules were already pretty conservative, and the recent FTX crash isn’t likely to encourage them to go any lighter.
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