The top financial officials from the Group of Seven (G7) largest advanced industrial economies has called on the Financial Stability Board to speed up crypto-asset regulation, Reuters reported Thursday, citing a copy of a communique it had obtained. The officials from Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States were meeting in Koenigswinter, Germany, following a G7 foreign ministers’ meeting earlier in the week.
„In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board)…to advance the swift development and implementation of consistent and comprehensive regulation,“
The turmoil referred to was the de-pegging of the TerraUSD (UST) stablecoin that began May 8 and sent shockwaves throughout the crypto sphere. There were warning signs that the G7 ministers would be addressing the problem at their meeting.
Bank of France Governor François Villeroy de Galhau, speaking at the Emerging Market Forum in Paris on Tuesday, said, “Crypto assets could disrupt the international financial system if they are not regulated, overseen and interoperable in a consistent and appropriate manner across jurisdictions.” He added, “We will probably […] discuss these issues among many others at the G7 meeting in Germany this week.”
The Financial Stability Board is an advisory body associated with the Bank of International Settlements. Its members represent institutions from 24 countries and several international organizations. It has no enforcement authority.
Related: Global financial regulator wants more data to measure risks of Bitcoin
The collapse of the Terra algorithmic stablecoin has had repercussions in legislatures around the world. United States Treasury Secretary Janet Yellen reiterated her previous calls for a „consistent federal framework” on stablecoins in a Senate Banking Committee on May 10, saying the situation “simply illustrates that this is a rapidly growing product and that there are risks to financial stability and we need a framework that’s appropriate.”
On Tuesday, financial officials from the world’s leading economies have called on the international Financial Stability Board (FSB) to step up regulations in order to protect the global economy from the potential risks of cryptocurrencies, according to a report by the Financial Times.
At their summit in Canada, representatives of the G7 nations, together with the representatives of the European Commission, the European Central Bank, the Bank for International Settlements and the International Monetary Fund, requested that the FSB conduct a detailed analysis of global crypto assets and virtual currencies to assess their possible impact on the international financial system.
“We call on the Financial Stability Board to assess multilateral responses where needed, and to report back to G7 finance ministers and central bank governors,” their report said.
The call for more stringent regulation of the often-unrestricted world of cryptocurrencies comes following this year’s massive rise in the prices of mainstream digital currencies, such as Bitcoin and Ethereum.
The G7 nations and the related organizations argued that, while the global market capitalization of virtual currencies is still far smaller than the traditional financial sector, they remain vulnerable to hacker attacks, money laundering and other illicit activities. In addition, the officials said, cryptocurrencies could have an unpredictable and potentially destabilizing effect on the global financial system.
“In the absence of greater regulation, services related to crypto-assets will continue to grow and investors and consumers face legal and financial risks,” the G7 report noted.
The officials have further requested the FSB to draw up concrete recommendations by July with the aim of providing guidance and direction to G7 governments and central banks. In this way, the G7 nations hope to protect the global economy from the risks associated with virtual currencies.