On March 18, the FSB – Financial Stability Board – published a paper where it gave its position on a number of topics for the G20. Page 2 of the report evokes the subject that is close to our heart: the “crypto-active”, and good news, the FSB is not pro-regulation and considers the risk as being minimal, even non-existent. Here is the translation of the passage on “crypto-actives”.
“In response to the concerns of its members, the FSB undertook a risk assessment for the financial stability of the rapid growth of crypto-assets.
The FSB’s initial statement is that crypto-assets pose no risk to overall financial stability in the current state. This is partly due to the fact that they are modest in size compared to the financial system as a whole. Even at their recent “high”, the combined value of capitalization was less than 1% of global GDP. In comparison, just before the global financial crisis, the theoretical value of credit default swaps was 100% of world GDP. Their small size, and the fact that they are not substitutes for legal currencies – in addition to very limited use in the real economy and financial transactions – would tend to show that the risk of threat is weak, see nonexistent.
However, this market continues to evolve rapidly, and this initial statement may evolve if crypto-assets become more widely used, or more closely linked to the core of the financial system. For example, increased use and greater interconnectivity could – if done without improvements – pose risks to financial stability through trust. In order to support the monitoring and timely identification of new risks to financial stability, the FSB will identify parameters and isolate gaps in its data.
Crypto-assets raise many questions concerning the protection of customers and investors, as well as questions regarding their use for illegal purposes [money laundering, financing of terrorism …]. On the other hand, the underlying technologies have the potential to improve the efficiency and inclusivity of the financial system, and the economy in general.
The competent national authorities have begun to address these issues. Given the global nature of these markets, international cooperation is advised and supported by international organizations such as CPMI, FATF and IOSCO.
The FSB will define the parameters for increased monitoring of the risks presented by crypto-assets for the financial system, and will keep the G20 informed. “