Charting the Course: Global Crypto Policy Roadmap from Leading Standard Setters

The Financial Stability Board (FSB) and the International Monetary Fund (IMF) are poised to unveil a collaborative document aimed at fostering worldwide coordination in the realm of cryptocurrency policy. This groundbreaking initiative was announced by FSB Chair Klaas Knot in a letter released on a Tuesday.

Scheduled for presentation at the upcoming G20 Summit, the joint paper outlines a strategic roadmap for implementing robust policy frameworks in the cryptocurrency space. This comprehensive approach emphasizes the importance of global coordination, cooperation among nations, and the sharing of critical information.

The genesis of this paper lies in India's request, as the nation currently holds the G20 presidency until December. It represents a response to the pressing need for a holistic policy response to the multifaceted risks posed by cryptocurrencies. Recent events, including the insolvency of the FTX cryptocurrency exchange and the destabilization of the terraUSD stablecoin, have spotlighted the vulnerabilities inherent in the crypto landscape. These vulnerabilities demand vigilant oversight, especially considering the growing interconnections between cryptocurrencies and the broader financial system, as highlighted in Knot's letter.

Knot underscored that the risks associated with crypto-assets extend beyond mere financial stability. They also encompass macroeconomic concerns related to monetary sovereignty, fluctuations in capital flows, and the implications for fiscal policy.

Furthermore, the paper will emphasize the heightened macrofinancial risks that both emerging markets and developed economies may encounter. These risks could necessitate the implementation of targeted measures to mitigate potential adverse effects.

In August, reports from Bitsday indicated that G20 nations were actively advocating for global collaboration within the paper. India, in particular, was instrumental in pushing for the inclusion of discussions surrounding macrofinancial implications and risks specific to emerging markets and developing economies.

It is worth noting that the FSB had already called for the establishment of a global framework in July. Officials have reiterated that the rules to be outlined in this collaborative effort will not necessitate the creation of an entirely new regulatory structure. Instead, they will build upon existing foundations to ensure a more cohesive and coordinated approach to cryptocurrency policy on a global scale.