According to a report published by Reuters on 31 May, G20’s international regulator, Switzerland based Financial Stability Board, or FSB, said in its latest statement that regulators need better risk assessment strategies for financial activities in the cryptocurrency sector.
FSB maintained that regulators needed to create better risk assessment strategies as the current rules were ‘patchy’ following which any sudden technological change might lead to problems in digital currency policies. Furthermore, FSB stated that regulators ought to know beforehand the risks involved with the emerging industry, which could affect financial stability.
FSB recognized that digital coins did not pose any material stability risks presently. It suggested that a tool to improve risk assessment strategies was an assessment of banks’ and other financial institutions’ exposure to digital currencies.
Varied Regulatory Approaches
Even though global regulatory bodies were looking in the case of cryptocurrencies, the matter is far from solved, according to FSB, since rules on digital currencies vary across different countries. In some countries like Japan, an attempt has been made to license cryptocurrency exchanges while in China, digital currencies face a near total ban. Countries like France, the United States, and Great Britain are still in the rudimentary stage of building an able policy regarding digital currencies.
FSB went on to say that in the first decade of their emergence, cryptocurrencies have ’caused headaches for global and national policymakers.’
FSB stated that despite the risk associated with the cryptosphere, interest has continued to emerge for it, and every other day, major firms initiate digital currency-related services.
“With the rise has come renewed interest from risk-tolerant investors. Major financial firms, including Fidelity International, have also moved to offer cryptocurrency-related services.” The worldwide picture is very hazy since, on the one hand, Latin America’s biggest bank is considering releasing security tokens, while on the other, a representative of Bank of England is questioning the reliability of cryptocurrencies as a store of value.