Although cryptocurrencies currently do not pose any real risk to the global economy, the Financial Stability Board (FSB) has urged regulators in different countries to step up efforts in monitoring the possible challenges that the new industry can create in the future.
The FSB, according to Reuters, included the warning as part of its report to G20 finance ministers and central bank governors ahead of this year’s annual meeting.
The FSB in its report expressed concern that the current nature of regulations for the cryptocurrency industry is ‘patchy’ while quick technological change will likely lead to gaps in the policies regarding digital money.
Going further, the FSB duly recognized the efforts of the Organisation for Economic Co-operation and Development (OECD) and the Basel Committee on Banking Supervision (BCBS) to study the growth of cryptocurrencies.
However, the FSB reminded the G20 officials that laws regarding cryptocurrencies, investor protection, money laundering, financial stability differ across different jurisdictions.
For the foreseeable future, the FSB predicted that the “risks associated with crypto-asset markets and the level of significance of potential regulatory gaps would keep evolving.”
To solve the compunding problems, the watchdog talked up the possibility of member nations deciding the level of internal cooperation needed to provide regulatory oversight for the new industry and also recommending a check on how banks and other financial firms engage with digital money.
According to the report, the renewed recommendations by the FSB coincides with a time when the cryptocurrency markets are quietly getting back to the 2017 highs that first attracted the attention of global regulators.
Putting the necessary checks in place right now may be just what the industry needs to thrive and will also be in line with our earlier report about similar recommendations made by Former U.S Commodity and Futures Trading Commission (CFTC) Chair, Gary Gensler.
Earlier this month, Gensler had called on U.S regulators to provide clear guidelines for the young industry instead of clamping down on innovation by sticking to old laws.