Bitcoin and cryptocurrencies are under unprecedented scrutiny. This particular interest follows the collapse of the main cryptocurrency exchange FTX. Calls for stricter regulatory controls have multiplied. The amount lost by FTX and its sister company Alameda Research reaches significant levels. This bankruptcy could thus threaten the crypto market as a whole.
The urgency of regulation
During the last meeting of the Group of 20 industrialized countries in Indonesia (G20), leaders discussed the issue of regulation. The countries present described as “critical” the need for international rules to govern the crypto space. As the market is growing, potential risks to financial stability need to be mitigated by regulators.
US President Joe Biden released a statement on the White House website following this week’s meeting in Bali, Indonesia. Accompanied by the other leaders, it is written there that it is essential to sensitize the public to the risks. Thus, they see the need to strengthen regulatory outcomes and support a level playing field by harnessing the benefits of innovation. The US Treasury Secretary also intervened, specifically on the fall of FTX. Janet Yellen considers that this event demonstrates the need for more effective monitoring of the cryptocurrency markets. She also adds that the same protections offered in traditional markets should apply to cryptocurrencies.
Initiatives towards regulation
Last month, the global financial standards body proposed rules for cryptocurrency companies and markets. The Financial Stability Board (FSB) wants to apply the same strict rules that govern traditional finance.
G20 leaders did not fail to welcome the approach proposed by the FSB to establish a comprehensive international framework on the regulation of activities related to crypto-assets. The basis of this regulation would be: same activity, same risk, same regulation. Therefore, the leaders would like to ensure that the crypto-asset ecosystem, including so-called stablecoins (linked to fiat currency), is closely monitored and subject to strong regulation, supervision and control to mitigate potential risks to financial stability“.
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