FSB Chair: Crypto Markets Could Soon Endanger Global Financial Stability
Klaas Knot stated that the Financial Stability Board is “well-placed” to present rules in the cryptocurrency industry.
The Chairman of the Financial Stability Board (FSB) – Klaas Knot – raised worries that the cryptocurrency sector could damage the monetary network in the future. In his opinion, the digital asset market is expanding at a fast rate, while some of the tokens are used by criminals in illegal activities.
The FSB Wants to Control“Unbacked” Crypto
The absence of a relevant regulatory framework applied to the digital asset industry has been a concern addressed by multiple famous individuals. The latest person to give his two cents on the matter is Klaas Knot – President of the Dutch central bank and Chairman of the FSB.
In a recent statement, the economist debated that bitcoin and the altcoins could work under the radar of watchdogs, and as such, criminals could facilitate illegal transactions with them. For example, Klaas pointed out the ongoing military clash between Russia and Ukraine.
He thinks that the war has “strengthened” the belief that crypto plays a role in money laundering, cybercrime, and ransomware.
The central banker recognized the instantaneous development of the asset class in recent years. However, he argued that this progress could present a danger to the global monetary ecosystem:
“Cryptoassets are evolving rapidly and may pose a great danger to global financial stability in the future. These markets’ rapid evolution and international nature also increase the potential for regulatory gaps, fragmentation, or arbitrage.”
Klaas stated that one of FSB’s primary objectives will be to establish comprehensive laws on the market, especially on “unbacked” cryptocurrencies and stablecoins. In addition, the institution will seek to impose a regulatory framework on the DeFi sector by cooperating with governmental organizations such as the Financial Action Task Force.
Politicians in Acceptance of Regulations
The list of lawmakers and government administrators who impose crypto laws keeps increasing.
A famous member of that club is Christine Lagarde – President of the European Central Bank. Soon after the start of the Russia-Ukraine war, she encouraged the EU to strengthen crypto regulations. Otherwise, the world’s biggest country by continent could use the asset class to evade sanctions.
It is worth mentioning, though, that cryptocurrencies are not fit for such endeavors due to their underlying blockchain technology. Changpeng Zhao – CEO of Binance – described in detail:
As you can see from the facts that “No smart person in their right mind would do that. Crypto is too traceable, the governments around the globe are increasingly very good at tracking crypto transactions. So crypto is not suitable for that.”
Next to be noted is French President Emmanuel Macron. Last month, he opined that France should dive more in-depth into the Web3 ecosystem and Metaverse. However, he backed the European Parliament’s approach to obtaining rules in the digital asset sector by implementing the MiCA legislation (Markets in Crypto Assets).
“To build a unified market on a European ranking, we will now need to verify the uniformity of laws on the continent. Given this context, I am in endorsement of making immediate progress on the MiCA regulation,” Macron stated.