The Financial Stability Board (FSB) sees risks to global financial stability as the cryptocurrency market might grow quickly, Reuters has learned. The FSB said in a recent report international financial regulators should prepare new measures to fight global risks if the current trajectory of growth in scale and interconnectedness of crypto-assets to these institutions continues.
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"Without sufficient regulation and market oversight, DeFi and associated platforms might present risks to financial stability," the organization said.
Although the FSB has no powers to impose rules, the organization's members commit to turning agreed principles into national rules, Reuters noted. The move comes after the Basel Institute on Governance warned there is a risk of "regulator shopping" in the cryptocurrency market as there are still jurisdictions with weak regulatory framework. According to a recently published "Basel AML Index 2021: 10th Public Edition," the risk is "exacerbated by the hyper-globalnature" of cryptocurrencies.
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