cointelegraph.com
The Financial Stability Board (FSB), the global body that monitors the financial services indreleased a report on Nov. 28 asserting that the crypto industry might need additional regulations to prevent another catastrophe on the scale of the FTX scandal
According to the report, the FSB said the market turmoil that ensued from the collapse of cryptocurrency exchange FTX brought to light the flaws in multifunction crypto-asset intermediaries (MCI) - platforms that combine trading and related activities.
“MCI vulnerabilities are not very different from those of traditional finance, including leverage, liquidity mismatch, technology and operational vulnerabilities, and interconnections.”
However, in the case of MCI’s, it said particular combinations of functions could “exacerbate these vulnerabilities,” such as MCI engagement in “proprietary trading, market making on their own trading venues and the lending and borrowing of crypto-assets.”
The FSB said these vulnerabilities are amplified even more by what it called the lack of “effective controls” and transparency.
“There are also additional vulnerabilities stemming from the centrality of MCIs in the crypto-asset ecosystem and their concentration and market power,” it said.
Related: European trade body warns against the exclusion of DeFi from MiCA
The international watchdog suggested that regulators should assess whether recommendations previously published by the FSB and the International Organization of Securities Commissions (IOSCO) will be enough to stop crypto-related risks from being exacerbated in the wider financial landscape.
"Further work may be needed to enhance cross-border cooperation and information sharing and to address information gaps identified in the report.”
In July, the FSB finalized its recommendations for a global crypto framework and released joint policy recommendations for crypto assets alongside the International Monetary Fund (IMF) at the request of the G20 in September.
A few weeks later, the G20 adopted the IMF-FSB recommendations as a regulatory roadmap.
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