Crypto ‘part of the mainstream’ as FSB gives seal of approval

The statement from the international agency is contained in a report that sets out the metrics the FSB will use to monitor crypto-asset markets. “While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time, it recognises the need for vigilant monitoring in light of the speed of market developments,” it says.

Nigel Green, CEO of deVere Group, a financial planning and advisory firm, says the FSB’s statement shows cryptocurrencies are now undeniably part of mainstream finance.

“This report comes after the FSB, which is headed by Bank of England Governor Mark Carney, previously wrote a letter to the G20 finance ministers and central bank governors earlier this year stating that Bitcoin does not pose a ‘systemic risk’ to the global financial system,” he adds. “As such, the latest report can be seen as further recommendation of cryptocurrencies from the influential FSB — which has members from all the G20 major economies.”

The FSB has developed a monitoring framework which focuses on the transmission channels from crypto-asset markets that may give rise to financial stability risks. It says monitoring the size and growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should valuations fall.

The framework includes metrics on the use of leverage and financial institution exposures to crypto, as well as trading volumes, pricing, clearing and margining for crypto-asset derivatives. The Financial Action Task Force (FATF) will report separately to the G20 on its work concerning the money laundering and terrorist financing risks relating to crypto-assets.