“We at the FSB are mandated by the G-20 to create the global regulatory framework for crypto asset activities,” Dr. Klaas Knot, chairman of the FSB and president of De Nederlandsche Bank, said in a press conference in Lapu-Lapu City, Cebu on Wednesday, May 17, 2023, during the FSB-Regional Consultative Group for Asia (RCGA) Meeting and Workshop.
“We regard crypto assets as highly speculative assets. But as long as there are many citizens in the world investing in these assets, they need a certain level of protection,” he added.
The G-20 is made up of Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.
Transparency
Knot said cryptocurrency needs to have the same regulatory framework as the rest of the economy, such that issuers are demanded transparency.
“We will come up with a global regulatory framework. It only makes sense to regulate this from a global perspective. Nowadays, you can take a server anywhere in the world and start issuing these digital assets. It only works if we take a global approach, which not only applies to G-20 countries but to all countries in the world,” Knot said.
Negative reputation
The FSB said it is aware that crypto has earned a negative reputation as the medium for criminal activities such as drug trafficking, money laundering, and tax evasion.
Global regulations must be formulated such that jurisdictions that do not follow the regulations will face additional supervisory scrutiny, Knot said.
Bangko Sentral ng Pilipinas (BSP) Gov. Felipe Medalla, who co-chaired the FSB-RCGA, said in the same press conference that the Philippine government does not see crypto would be as a cause for financial instability in the country.
However, he warned younger generations that crypto, considering its volatility, is a high-risk investment as investors could incur huge losses in a short period of time.
Medalla said the BSP can only regulate “when crypto turns into deposits or bank accounts; that’s when we will regulate.”
“Regulation will come in if crypto meets banking,” he said.
Aside from regulating crypto, the FSB-RCGA Meeting and Workshop tackled issues regarding recent financial market developments and their impact on the region, and the role of non-bank financial intermediation in Asia.
Members discussed the implications of these developments for financial stability in Asia, including the increasing role of NBFI in the region and steps being taken to enhance the resilience of the sector.