In 2022, The FSB, as mandated by the G20, has examined regulatory and supervisory issues raised by crypto-asset activities with a focus to address financial stability risks. Building on a comprehensive analysis of market structure, an extensive survey on national regulatory approaches, and an assessment of challenges and gaps, the FSB proposed high-level recommendations to promote a consistent regulatory framework.

This report describes outcomes of these initiatives, covering:

  • Essential activities and interconnectedness of crypto-asset markets;

  • Applicable international standards and regulatory and supervisory approaches to crypto-asset activities;

  • Issues and challenges as well as potential gaps in regulatory, supervisory and oversight approaches to crypto-asset activities;

  • A set of nine high-level recommendations.

The high-level recommendations seek to promote the consistency and comprehensiveness of regulatory, supervisory and oversight approaches to crypto-asset activities and markets, and to strengthen international cooperation, coordination and information sharing. The recommendations apply to any type of crypto-asset activities and associated issuers, service providers that may pose risks to financial stability, and are in complement with the high-level Recommendations on global stablecoin arrangements.

The FSB has been working closely with the International Monetary Fund (IMF), World Bank, the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), the International Organization of Securities Commissions (IOSCO), and the Financial Action Task force (FATF) to ensure that the work underway regarding the monitoring and regulation of crypto-asset activities and markets is coordinated and mutually supportive.

The FSB is soliciting comments from the public on these recommendations. A set of questions for this purpose are included in its proposed framework. The FSB encourages all interested stakeholders to participate in the consultation. Responses should be sent to [email protected] by Thursday 15 December 2022. Responses will be published on the FSB’s website unless respondents expressly request otherwise.

Proposed recommendations for the regulation, supervision and oversight of crypto-asset activities and markets

  1. Authorities should have the appropriate powers and tools, and adequate resources, to regulate, supervise, and oversee crypto-asset activities and markets, including crypto-asset issuers and service providers, as appropriate.

  2. Authorities should apply effective regulation, supervision, and oversight to crypto-asset activities and markets – including crypto-asset issuers and service providers – proportionate to the financial stability risk they pose, or potentially pose, in line with the principle “same activity, same risk, same regulation.”

  3. Authorities should cooperate and coordinate with each other, both domestically and internationally, to foster efficient and effective communication, information sharing and consultation in order to support each other as appropriate in fulfilling their respective mandates and to encourage consistency of regulatory and supervisory outcomes.

  4. Authorities, as appropriate, should require that crypto-asset issuers and service providers have in place and disclose a comprehensive governance framework. The governance framework should be proportionate to their risk, size, complexity and systemic importance, and to the financial stability risk that may be posed by the activity or market in which the crypto-asset issuers and service providers are participating. It should provide for clear and direct lines of responsibility and accountability for the functions and activities they are conducting.

  5. Authorities, as appropriate, should require crypto-asset service providers to have an effective risk management framework that comprehensively addresses all material risks associated with their activities. The framework should be proportionate to their risk, size, complexity, and systemic importance, and to the financial stability risk that may be posed by the activity or market in which they are participating. Authorities should, to the extent necessary to achieve regulatory outcomes comparable to those in traditional finance, require crypto-asset issuers to address the financial stability risk that may be posed by the activity or market in which they are participating.

  6. Authorities, as appropriate, should require that crypto-asset issuers and service providers have in place robust frameworks for collecting, storing, safeguarding, and the timely and accurate reporting of data, including relevant policies, procedures and infrastructures needed, in each case proportionate to their risk, size, complexity and systemic importance. Authorities should have access to the data as necessary and appropriate to fulfil their regulatory, supervisory and oversight mandates.

  7. Authorities should require that crypto-asset issuers and service providers disclose to users and relevant stakeholders comprehensive, clear and transparent information regarding their operations, risk profiles and financial conditions, as well as the products they provide and activities they conduct.

  8. Authorities should identify and monitor the relevant interconnections, both within the crypto-asset ecosystem, as well as between the crypto-asset ecosystem and the wider financial system. Authorities should address financial stability risks that arise from these interconnections and interdependencies.

  9. Authorities should ensure that crypto-asset service providers that combine multiple functions and activities, for example crypto-asset trading platforms, are subject to regulation, supervision and oversight that comprehensively address the risks associated with individual functions as well as the risks arising from the combination of functions, including requirements to separate certain functions and activities, as appropriate.