G20 Watchdog Says 'Strong' Encryption Rules Are Coming in October - Decrypt

G20 Watchdog Says ‘Strong’ Encryption Rules Are Coming in October – Decrypt

The Financial Stability Board (FSB) announced today that it will come up with its own proposal for rules that ensure “strong regulation and oversight” of cryptocurrencies.

The organisation, which includes treasury officials and central bank governors from the Group of Twenty (G20), said it would report to G20 finance ministers and central bank governors in October, outlining its regulatory and supervisory approaches. stablecoins and other crypto assets.

“Crypto assets, including so-called stablecoins, are rapidly evolving. The recent turmoil in the crypto-asset markets highlights fundamental volatility, structural weaknesses, and the question of their increasing connection with the traditional financial system.”

The organization added that even a single market player failure could not only “impose potentially significant losses on investors and threaten market confidence,” but could also “rapidly transfer risks to other parts of the crypto-asset ecosystem.”

Today’s announcement comes on the heels of the dramatic collapse of the Terra ecosystem in May and the ensuing liquidity crunch – and eventually, bankruptcy – that many high-profile crypto lenders and hedge funds faced.

Notably, this is the first time that the FSB has proposed specific rules for the crypto space – although the organization has been keeping a close eye on the industry, so far it has refrained from any action.

The crypto community reacts to the G20 proposal

News of the incoming regulations was met with mixed responses from the crypto community.

Pedro Herrera, Senior Blockchain Analyst at DappRadar said: Decrypt.

According to Herrera, while some people might see the imposition of explicit rules as a “stepping stone for mass acceptance and adoption,” for many crypto purists, “regulation is the way creativity is stifled and freedom curtailed.”

“It is worth noting that while the regulations do not guarantee a fraud-free market, they do create a barrier for many bad actors to exploit the space,” he said, adding that, however, it is too early to jump to conclusions since nothing concrete proposals have been made. So far by the Group of Twenty.

Kene Ezeji-Okoye, co-founder of Millicent, the first stablecoin and central bank digital currency project to be funded by the UK government’s Department of Research and Innovation, agreed that more details were needed on the upcoming FSB proposal.

“While some form of regulation would undoubtedly make a place safer and allow for more ‘everyday’ adoption, over-regulation could easily cripple the industry, so the FSB’s vision calls for ‘strong’ global rules – without any idea what those are. Regulations might be — that’s a bit worrisome,” Izzy Okoye said Decrypt.

According to him, “The problem with trying to write a comprehensive rulebook for cryptocurrency is that by the time the book is published, the game will have changed dramatically.”

However, Ezeji-Okoye acknowledges that the events of the past few months have clearly shown that stablecoins are “one area that requires comprehensive regulation.”

“For digital currencies to become mainstream, stablecoins must be trusted by the public, and fully exchangeable for other types of public and private funds. The only realistic way to achieve this is through a common regulatory framework,” Millicent added.

Joseph Collement, legal counsel at Bitcoin.com, is far from confident that the FSB’s rules will have any positive impact on the industry.

“Regulators have been aware since 2018 that companies like Celsius are bogus banks without FDIC insurance. However, they have failed to protect consumers. FSB laws come too late and are potentially unhelpful for the industry as a whole,” said Collement. Decrypt.

However, some players see positives in the FSB’s move.

“It is encouraging to see more and more policy makers and regulators realizing that cryptocurrency is here to stay,” said Igneus Terrenus, Head of Communications at crypto exchange ByBit. Decrypt. “This emerging consensus will ensure the healthy development of the fast-growing and rapidly changing industry for decades to come.”

Terrenus added that ByBit would be happy to contribute its knowledge and resources to such endeavors.

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