Crypto Regulation to Be Standardized by the FSB

A statement by Dietrich Domanski, the outgoing secretary general of the Federal Reserve Board, highlighted the importance of addressing risks within the financial sector in light of recent events.

Crypto Regulation to Be Standardized by the FSB

After the collapse of FTX, a global financial watchdog was motivated to develop recommendations to regulate the crypto industry early in 2023 in response to the collapse of FTX.

A global financial organization, the Financial Stability Board, is reportedly preparing to regulate crypto next year. Dietrich Domanski, the outgoing secretary-general of the FSB, noted that recent events had highlighted the need for "urgent action" within the space. As he explained:

“Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating.”

According to Domanski, the goal is to hold crypto projects "to the same standards as banks" if they provide similar services.

Global policymakers have been criticized for allowing FTX to expand before it collapsed, following the recent collapse of Terraform Labs and the FTX exchange. In his opinion, such rules and standards would have prevented events such as Terra and FTX's collapse because they would not have met the "criteria for sound governance."

Global regulators will be given a timeline to implement the initial recommendations in the months to come according to the FSB. It is up to national and regulatory authorities to implement the FSB's recommendations.

Former FTX CEO Sam Bankman-Fried has been arrested and will be extradited to the United States by the Royal Bahamas Police. The U.S. government formally notified Bankman-Fried that criminal charges had been filed against him. Charges include wire and securities fraud, money laundering, and conspiracy. In a chat group that included FTX executives, Bankman-Fried denied being a member of "Wirefraud." Information was exchanged between the two companies.

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