More Crypto Safeguards Needed to Prevent FTX Fallout Situation, Says Financial Stability Board

The FSB groups regulators, central banks and treasury officials from the G20 economies.

More Crypto Safeguards Needed to Prevent FTX Fallout Situation, Says Financial Stability Board

Photo Credit: Re

Crypto vulnerabilities are amplified by a lack of effective controls, FSB said

Highlights
  • FTX crypto exchange collapsed last year and wreaked financial havoc
  • Threat to wider financial stability and the economy is limited presently
  • Crypto vulnerabilities are similar to those found in traditional finance
Advertisement

More measures may be needed to stop blow-ups at complex crypto firms like FTX from destabilising the wider financial system, the global Financial Stability Board (FSB) said on Tuesday.

The FSB, which groups regulators, central banks and treasury officials from the G20 economies, said turmoil in crypto markets last year when FTX collapsed highlighted how "multifunction" crypto firms, that combine trading and other activities, can exacerbate vulnerabilities.

The vulnerabilities are similar to those found in traditional finance, including leverage, liquidity mismatches, technology and operational vulnerabilities, the FSB said in a report.

"These vulnerabilities are further amplified by a lack of effective controls and operational transparency, poor or no disclosures, and conflicts of interest," it said.

Evidence suggests that the threat to wider financial stability and the economy is limited at present, it added.

The FSB and IOSCO, a global body of securities watchdogs, have already published this year high level recommendations for supervising crypto activities.

Regulators, however, should assess whether these measures adequately stop risks from crypto being amplified across the financial system, the report said.

"Further work may be needed to enhance cross-border cooperation and information sharing and to address information gaps identified in the report," the FSB said.

© Thomson Reuters 2023


Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For details of the latest launches and news from Samsung, Xiaomi, Realme, OnePlus, Oppo and other companies at the Mobile World Congress in Barcelona, visit our MWC 2024 hub.

Further reading: Cryptocurrency, FTX, Crypto Regulation, FSB
Redmi Watch 4 With HyperOS, Buds 5 Pro With Up to 38 Hours of Battery Life Launched: Price, Specifications
Crypto Price Today: Bitcoin Briefly Hit 19-Month High, Losses Strike Ether, Cardano Among Others
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »