August 15, 2022

Volume XII, Number 227

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August 12, 2022

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FSB Highlights Vulnerabilities Crypto-assets for Global Financial System

On July 11, the Financial Stability Board (FSB) published a letter sent to G20 finance ministers and central bank governors outlined concerns over the rapid growth in crypto-assets and vulnerabilities facing the global financial system. The letter highlighted the following:

  • Crypto-assets, including so-called stablecoins, are fast-evolving.

  • Crypto-assets and markets must be subject to effective regulation and oversight commensurate to the risks they pose, both at the domestic and international level.

  • Crypto-asset service providers must at all times ensure compliance with existing legal obligations in the jurisdictions in which they operate.

  • The recent turmoil in crypto-asset markets highlights the importance of progressing ongoing work of the FSB and the international standard-setting bodies to address the potential financial stability risks posed by crypto-assets, including so-called stablecoins.

  • Stablecoins should be captured by robust regulations and supervision of relevant authorities if they are to be adopted as a widely used means of payment or otherwise play an important role in the financial system.

  • FSB members support the full and timely implementation of existing international standards.

  • The FSB is working to ensure that crypto-assets are subject to robust regulation and supervision.

The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets

Putting It Into Practice: This latest FSB letter attempts to make it clear that crypto is now mainstream and regulators need to take urgent action to address the potential risks to other areas of the global economy. Recent congressional examination highlights a similar need for an effective U.S. regulatory framework to ensure that crypto-asset activities posing risks similar to traditional financial activities are subject to the same regulatory outcomes (we discussed these examinations in previous blog posts here and here).

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 209
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Associate

Gabriel is an Associate on the Telecom team and the Co-Lead Associate on the Blockchain and Digital Assets team in the firm’s Washington, D.C. office. He is a Blockchain Law Professional as Certified by the Blockchain Council.

At Sheppard Mullin, Gabriel assists the Telecom team in all aspects of communications law and regulation including, satellites, spectrum, 5G implementation, media companies, and new technologies. He assists the Blockchain and Digital Assets team in legal issues relating to the use of blockchain technology, social media, internet, video games, online gambling,...

202-747-2194
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