Randal K. Quarles, chairman of the Financial Stability Board (FSB), based in Switzerland, said that any regulation of cryptocurrencies should take into account the risks involved while protecting the innovations that the sector brings.
In his speech at the Third Financial Stability Conference, Quarles acknowledged that innovation in the financial sector was advancing rapidly, while calling for prudent regulation. Although different jurisdictions are carefully examining the regulatory aspect of digital currencies, there are still fundamental questions that need to be answered.
He also acknowledged that cryptocurrencies do not fit well into the current regulatory framework and added:
“WE MUST REMEMBER THAT OUR REGULATORY AND SUPERVISION APPROACHES ADDRESS RISKS IN AN APPROPRIATE AND AT THE SAME TIME CONSERVE THE BENEFITS THAT INNOVATION CAN BRING […] cryptocurrencies DO NOT FIT INTO OUR REGULATORY BOXES AND OPERATE IN THE DIGITAL SPHERE, WHERE THEY CAN EASILY CROSS NATIONAL BORDERS “
Cryptocurrencies and a threat to financial stability
In addition, the President believes that cryptocurrencies in their current form may not yet jeopardize global financial stability. In general, it recommends regulation that dampens the financial system but also addresses risks.
He added that the FSB’s current focus on cryptocurrencies stems from the growth of the sector, with market capitalization swinging over $ 2 trillion.
Cryptocurrency regulation has become a hot topic, with many opinion leaders in the sector suggesting that regulation will help assets such as BTC continue to flourish. For example, according to former stockbroker (known as “Wolf from Wall Street” Jordan Belfort), regulation in this sector will benefit.
Regulators focus on digital currencies
In recent months, the growth of cryptocurrencies has led regulators, for example in China, to report action against the sector, posing a threat to the general stability of the financial system. The debate has also attracted international organizations, including the International Monetary Fund.
According to the IMF, while cryptocurrencies offer new opportunities, such as facilitating cheap payments, they remain a significant risk.
Overall, other jurisdictions, such as the United States, are finding out how best to regulate cryptocurrencies. However, cryptoregulation in the country focuses on cryptocurrency and tax evasion, regulation of stablecoins, and the potential of investment instruments such as cryptocurrency ETF.