Global Crypto-Asset Report

The Financial Stability Board (FSB) published a report this week (16 July 2018), addressing its, and related standard setting bodies work on crypto-assets, which will be delivered to the G20 finance ministers and central bank governors for their meeting in Buenos Aires on 21-22 July. The potential ramifications of the report extend even further given the FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups.

Although the FSB is 17,000km’s away from Sydney, is chaired by the governor of the Bank of England and has its secretariat located in Basel, Switzerland, its relevancy is apparent given Australia is an integral member of the G20. On that basis, aspects of, and findings arising from the report, are likely to influence local regulatory views surrounding transactions in Crypto-assets.

In summary, the reports framework seeks to monitor the financial stability implications of developments in crypto-asset markets.

In doing so, the report sets out the metrics that the FSB will use to monitor crypto-asset markets as part of its ongoing assessment of vulnerabilities in the financial system, which include metrics on trading volumes, pricing, clearing and margining for crypto-asset derivatives.

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

The report also refers to the work being undertaken by the International Organization of Securities Commissions (IOSCO) in establishing an initial coin offering (ICO) consultation network to discuss experiences and concerns regarding ICOs, and is developing a support framework to assist members in considering how to address domestic and cross-border issues stemming from ICOs that could impact investor protection. IOSCO is also discussing other issues around crypto-assets, including, for example, regulatory issues around crypto-assets platforms.