Cryptocurrency owners will be protected at the legislative level

International standard setters have called for stricter rules to protect the digital assets of cryptocurrency users. They want to eradicate the possibility of conflicts of interest after numerous problems have arisen in the crypto industry.

The Financial Stability Board (FSB), which brings together regulators from two dozen jurisdictions, including the US, EU, China, and the UK, has published recommendations to ensure «consistent and comprehensive» regulation of the sector. They are based on proposals originally put forward in October 2022. The main task was to prevent situations similar to those that occurred after the collapse of the FTX exchange or Celsius Network.

«The events of the past year have highlighted the volatility issues and structural vulnerabilities of crypto assets and related market participants,» the document says. «The new regulations may lead to large cryptocurrency conglomerates being forced to separate some of their activities and functions.»

In addition, the FSB mentioned the recent banking crisis, which negatively affected the liquidity of cryptocurrency markets. The document also notes the problems associated with the short-term depreciation of USD Coin (USDC) to the value of the US dollar and the sudden collapse of the algorithmic stablecoin TerraUSD (UST) in May 2022, which was the first sign of the onset of the crypto zombie.

«This global framework does not rewrite or create an entirely new set of rules for crypto assets,» said FSB Secretary General John Schindler. «The rules for digital currencies are not that different from the traditional financial environment. While jurisdictions are working on implementing new standards, we urge all participants in the cryptocurrency industry to start complying with the basic provisions now ,» the expert emphasized.

As a reminder, back in October 2022, the FSB called on regulatory agencies around the world to expand existing financial regulations and develop new rules for stablecoins. «Many cryptocurrency companies are breaking the law by combining traditional activities such as trading, lending, custody, and brokerage services without licensing ,» the Financial Stability Board said.