Dietrich Domanski, the FSB departing secretary general, stated that recent incidents have emphasized the need to “address threats” in the sector.
The FTX crash prompted a worldwide financial body to issue suggestions to regulate the cryptocurrency market in early 2023.
The Financial Stability Board (FSB), an international agency that supervises the global financial system, is said to be planning moves to regulate cryptocurrency next year. Recent occurrences, according to Dietrich Domanski, the FSB’s departing secretary-general, have emphasized the need to “address threats” in the domain. He elaborated:
“Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating.”
Developing Crypto Regulatory Guidelines
Domanski further stated that the purpose of developing crypto regulatory guidelines will be to hold crypto projects “to the same standards as banks” if they provide comparable services as banks.
With the recent failures of major cryptocurrency initiatives like Terraform Labs and the FTX exchange, worldwide governments have come under fire for enabling FTX to develop before collapsing. Such laws and norms, according to the FSB source, would have avoided occurrences like the Terra and FTX collapse since they would not have satisfied the “conditions for sound governance.”
The FSB intends to develop a schedule for global regulators to adopt the initial proposals in the coming months. Following the provision of recommendations, rules agreed upon at the FSB can be enacted by various national and regulatory bodies.
Meanwhile, Sam Bankman-Fried, the former CEO of FTX, was recently detained by Royal Bahamas police and is scheduled to be deported to the United States. The arrest followed the US government’s formal notification that criminal charges had been brought against Bankman-Fried. Wire and securities fraud, money laundering, and conspiracy to conduct wire and securities fraud are among the charges.
Hours before his arrest, Bankman-Fried denied being a member of a “Wirefraud” discussion group comprised of FTX officials. The group was purportedly used to communicate information regarding the operations of FTX and Alameda Research.