Gaps in the oversight of cryptoassets pose a challenge to global policymakers, says the Financial Stability Board (FSB) in a new report.
The FSB issued a report Friday that examines the work by international standards setters (including the Basel Committee on Banking Supervision, the International Organization of Securities Commissions (IOSCO), the Financial Action Task Force (FATF), and others) overseeing the emerging cryptoasset sector.
Among other things, the report finds that, while various regulators are working to address issues — such as investor protection, money laundering, and financial stability risks — there are gaps in oversight.
One reason for these gaps is that cryptoassets may not fall under the jurisdiction of traditional securities regulators or payment regulators.
Indeed, certain cryptoassets may be designed to operate outside of the regulated financial system, the report said, and there are not yet any international standards that apply to crypto.
“Assessing the significance of potential gaps is challenging, given the rapidly evolving nature of the cryptoasset ecosystem and related risks,” the FSB said.
Earlier this week, IOSCO published a consultation paper on regulating crypto trading, which recommends that cryptoassets that fall under the jurisdiction of securities regulators should be subject to the same principles as traditional securities.
In Canada, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) recently wrapped up their own joint consultation on a proposed framework for regulating cryptoasset trading.
Given the risk and uncertainty in this area, the FSB recommended that the G20 continue to monitor the emerging crypto space and consider whether there needs to be more formal coordination between authorities to address the gaps in oversight.