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Gungun Bhatia
Oct 11, 2022
by Gungun Bhatia

FSB Proposes Comprehensive International Cryptocurrency Rules

FSB

Table of contents

  1. FSB's Concerns About Liquidity Imbalances
  2. TerraUSD To Use Automated Algorithms
According to plans by the Financial Stability Board (FSB) on Tuesday, stablecoins may need to consolidate their issuance, and big cryptocurrency platforms may be dismantled. In the wake of recent instability in the cryptocurrency market, the Financial Stability Board, a watchdog organization and standard-setter for the global financial system sponsored by central banks and finance ministries, seeks to witness complete international regulation. It targets conflicts of interest in complex operations and algorithmic stablecoins like the now-defunct terraUSD.

FSB's Concerns About Liquidity Imbalances

Klaas Knot, the Dutch central banker who heads the FSB, addressed the finance ministers of the 20 largest economies in the world, claiming that the current crypto winter has confirmed his assessment of the structural deficiencies in these markets.

In a paper released for comment on Tuesday, the FSB urged governments worldwide to expand current financial regulations and establish new ones to address innovative crypto threats. According to the report, some cryptocurrency businesses are already breaking the law by incorporating different illegal activities. It prompted national authorities to cooperate and dissolve these businesses if there were increased risks or conflicts of interest.

TerraUSD To Use Automated Algorithms

The "flawed" terraUSD can employ automated algorithms to preserve value, but new FSB proposals might require stablecoins that are useful in several countries to centralize control. As a result, this tries to fix critical flaws in the structure of terraUSD, which was supposed to be exchangeable with Luna.

The FSB would rely on peer pressure as it lacks enforcement authority to prevent a situation in which crypto enterprises may select the country with the most lenient regulations. The FSB intends to complete the proposals by the middle of next year, and consultations are still available as of mid-December.

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stablecoins TerraUSD Financial Stability Board (FSB) Cryptocurrency Rules
FSB Proposes Comprehensive International Cryptocurrency Rules
Gungun Bhatia
Gungun is an enthusiastic writer that likes to create content for various aspects of the blockchain and crypto industry. She carries out extensive research and provides readers with informative and high-quality material.

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