On 17 July 2023 the Financial Stability Board (FSB) the High-level Recommendations for the Regulation, Supervision and Oversight of Crypto-asset Activities and Markets: Final report (Crypto Report) and the revised High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements: Final Report (Stablecoin Report).

The Crypto Report includes FSB recommendations addressed to financial regulatory, supervisory and oversight authorities on how to implement an effective regulatory and supervisory framework that is technology-neutral and focuses on underlying activities and risks.

The final recommendations incorporate stakeholders feedback following FSB public consultation in 2022 but do not comprehensively address all specific risk categories such as Anti-Money Laundering/Combating the Financing of Terrorism; data privacy; cyber security; investor protection and market integrity.

The finalized recommendations further clarifies FSB’s expectations pertaining to (i) regulatory powers and tools; (ii) general regulatory framework; (iii) cross-border cooperation, coordination and information sharing; (iv) governance; (v) risk management; (vi) data collection, recording and reporting; (vii) disclosures; (viii) addressing financial stability risks arising from interconnections and interdependencies; and (ix) comprehensive regulation of crypto-asset service providers with multiple functions.

For more information about the Crypto Report, read our previous update here.

The Stablecoin Report includes FSB final recommendations that builds on stakeholders feedback following FSB public consultation in 2022.

“The High-level Recommendations seek to promote consistent and effective regulation, supervision and oversight of global stablecoin arrangements (GSCs) across jurisdictions to address the potential financial stability risks they pose”.

The finalized recommendations further clarifies FSB’s expectations pertaining to (i) authorities’ readiness to regulate and supervise global stablecoin arrangements; (ii) comprehensive oversight of GSC activities and functions; (iii)cross-border cooperation, coordination and information sharing; (iv) governance structures and decentralised operations; (v) risk management; (vi) data storage and access to data; (vii) recovery and resolution of the GSC; (viii) disclosures; (ix) redemption rights, stabilisation, and prudential requirements; and (x) conformance with regulatory, supervisory and oversight requirements before commencing operations.