12th October 2022 > > The FSB.

tl;dr

The FSB (Financial Stability Board) is trying to get in on the regulatory act.

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I see that the IMF (International Monetary Fund) has performed a Truss-inspired screeching U-turn and is now saying that the UK mini-budget is not only good for growth but will make the UK the best performing economy in the G7 for this year.

Egg face one’s on.

But it is too easy, and probably a little unfair, to poke fun at these dinosaur legacy centralised entities.

But I can’t help myself. Here’s another one.

Curious Cryptos’ Commentary – The FSB (Financial Stability Board)

I make no apologies for the CCC’s ongoing commentary on regulation. The regulatory and legislative framework around cryptos is the single most important factor that will determine the pace of crypto adoption.

Recently we have seen some very welcome developments, particularly in the US and in the EU.

Now the FSB is trying to get in on the act.

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The FSB is another one of those international agencies staffed by career bureaucrats who cannot be fired, and have very fat, guaranteed pension pots. Process, not outcome, is the focus of such organisations, and it beats me why anyone would want to work there.

From their own website:

“The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory and other financial sector policies.”

It is worth stating that the FSB has no real power – it is more akin to a lobbying organisation, but I must concede an important one, for reasons that I cannot fathom. In an ideal world its musings could be safely ignored, but unfortunately, we cannot do that.

Let’s see what they have to say.

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In a report issued yesterday, the FSB proposes a framework for the regulation of cryptos. This framework purports to mitigate potential risks, whilst encouraging the potential benefits:

“An effective regulatory framework must ensure that crypto-asset activities are subject to comprehensive regulation, commensurate to the risks they pose, while harnessing potential benefits of the technology behind them.”

You can read the eleven-page introduction to the report here, but I would be mightily surprised if any of you did so:

https://www.fsb.org/2022/10/international-regulation-of-crypto-asset-activities-a-proposed-framework-for-consultation/

No-one will be surprised that the regulation of stablecoins is front and foremost of this report. Indeed, the main meat of the report – of which there is little – is to draw regulatory distinctions between cryptos and stablecoins. For the latter, the FSB focuses on “effective stabilisation mechanisms” and concludes:

“The revised recommendations clarify that reliance on algorithms and arbitrage activities are not effective stabilisation mechanisms. Indeed, as the report describes, many existing stablecoins, including Terra/Luna, would not meet the FSB’s high-level recommendations.”

As the Terra fiasco happened months ago, this is the most extreme example of door closing after the horse has bolted ever known in humankind’s history.

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And, er, that’s it.

I mean there are a whole lot of words that say absolutely nothing at all. You can read the full report on cryptos comprising SEVENTY-SEVEN pages here, if you are short of things to do today:

https://www.fsb.org/wp-content/uploads/P111022-3.pdf

Oh, and not forgetting the accompanying report regarding stablecoins coming in at a much more manageable FORTY-FOUR pages:

https://www.fsb.org/wp-content/uploads/P111022-4.pdf

The public are invited to comment on what are essentially platitudes about the need for effective regulation, and a commitment to provide final details by mid-2023.

I will report back if anything more substantive is proposed at any point in time.