International agency to address crypto asset regulation and financial stability

Amidst the ever-evolving landscape of digital innovation and financial technology, the Financial Stability Board (FSB) is gearing up to tackle the challenges crypto assets pose. In a recent letter addressed to G20 finance ministers and central bankers, FSB Chair Klaas Knot outlined the agency’s plan to focus on asset tokenization as part of its support for the G20 crypto asset roadmap adopted last year.

Priority areas and action plan

The FSB’s letter, dated February 20 and made public on February 26, highlighted several priority areas, including non-bank financial intermediation, climate change, cross-border payments, and digital innovation. Knot emphasized that in 2024, the FSB aims to deliver reports on the financial stability implications of asset tokenization and artificial intelligence (AI).

Last year, the G20’s endorsement of a global regulatory and supervisory framework for crypto assets marked a significant step towards fostering stability and coherence in the rapidly expanding digital asset market. 

The adoption of the G20 Roadmap on Crypto Assets in October underscored the commitment of international stakeholders to address the challenges and opportunities presented by crypto assets.

Collaborating closely with the International Monetary Fund (IMF), the FSB played a pivotal role in developing a Synthesis Paper laying the roadmap for regulating crypto assets. This collaborative effort reflects the collective determination to ensure the soundness and resilience of the global financial system in the face of digital disruption.

Incident reporting and information exchange

Recognizing the growing importance of information exchange and cooperation in mitigating cyber and operational risks, the FSB plans to propose a format for incident reporting exchange. 

This initiative aims to facilitate the timely sharing of information on incidents among multiple financial institutions and agencies, thereby enhancing the financial system’s resilience against potential threats.

The FSB’s emphasis on accelerating digitalization across all finance sectors underscores the need for proactive measures to manage the associated risks. While digitalization has undoubtedly improved efficiencies, it has also heightened the interconnectedness of the global financial system, increasing the potential for systemic risks.

As Brazil assumes the presidency of the G20 this year, succeeding India, which led the charge for global crypto regulation, the momentum towards enhancing regulatory frameworks and promoting international cooperation remains strong. South Africa is poised to take over the G20 leadership in 2025, signaling a continued commitment to advancing global financial stability and resilience.