Reserve Bank of India Governor Shaktikanta Das on Tuesday said that the G20's Financial Stability Board (FSB) has recognised that individual jurisdictions can ban crypto if required.
The FSB is an international body that monitors and makes recommendations about the global financial system. It was established after the G20 London summit in April 2009 as a successor to the Financial Stability Forum. The individual jurisdiction also means the individual countries in the G20 group.
In Gandhinagar, Das added that the enthusiasm on issues pertaining to cryptocurrencies has come down. He also highlighted a great amount of caution and concern surrounding cryptocurrency, especially after many fraud issues centred around cryptos.
However, Das emphasised on the importance and role that the Central Bank Digital Currency’s (CBDC) will play in the future.
"CBDCs are a new currency and it will mean a fundamental change in the currency system, in the system of money across the world. It is something which is a part of the process, the process has started which needs some time," said RBI Governor.
In its latest report on the global regulatory framework for crypto assets, the FSB on Monday highlighted the evolving nature of crypto-asset markets and the potential risks they pose to global financial stability. The report emphasised on the need for proactive evaluation of policy responses to address these risks in a timely manner.
The FSB's recommendations aim to establish a global regulatory baseline while acknowledging that some jurisdictions may adopt more stringent regulatory measures. The focus is on fostering a technology-neutral regulatory, supervisory, and oversight framework that targets underlying activities and risks, the report states.
According to the board, authorities in countries should possess the necessary power and capability to regulate and supervise crypto asset activities, including addressing evasion of regulations by crypto asset issuers operating in foreign jurisdictions.
The report suggested that countries may consider restricting their domestic users' access to foreign crypto asset service providers.
To prevent circumvention of regulations, the report called for regulatory outcomes in the crypto-asset market that are equivalent to those in the traditional financial market. It emphasised on the importance of effective coordination and information sharing among jurisdictions if countries host crypto asset issuers with a global reach.
Furthermore, the FSB recommended that crypto asset issuers implement comprehensive governance frameworks with clear lines of accountability and effective risk management practices. These issuers should also transparently communicate all risks and mitigation measures to users, it said.
The report also provided recommendations specifically addressing global stable-coin arrangements. It suggested that authorities should require such arrangements to have appropriate recovery and resolution plans, to maintain stability and mitigate the risk of runs, stable-coin arrangements should incorporate effective stabilisation mechanisms, clear redemption rights, and meet prudential requirements.
The release of this report coincided with ongoing discussions among the G20 Finance Ministers and Central Bank Governors regarding the establishment of a common cryptocurrency framework. The FSB's insights and recommendations will likely contribute to these discussions as stakeholders seek to address the regulatory challenges posed by the rapidly evolving crypto asset landscape.
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