LONDON (Reuters) - Regulators need to step up risk assessments of the cryptocurrency sector as current rules are patchy, and quick technological change may lead to gaps in policies on digital money, the global financial stability watchdog said.
They should work to foresee risks in the emerging industry that could impact financial stability, the Financial Stability Board (FSB) said yesterday in a report for G20 finance ministers and central bank governors.
An assessment of banks’ and other financial firms’ exposure to digital money was one potential tool, the FSB said, adding that digital coins did not currently present a material stability risk.
Though global bodies including the Organisation for Economic Co-operation and Development and the Basel Committee on Banking Supervision are looking at cryptocurrencies and investor protection, financial stability and money laundering, rules vary across jurisdictions, the FSB said.
In their first decade, cryptocurrencies have caused headaches for global and national policymakers.
Bitcoin muscled its way onto regulators’ radars in 2017, when frenzied retail buying saw it approach $20,000. But last year the bubble burst, and it lost three-quarters of its value, underscoring its volatility.Regulators’ approaches have varied from a near-total ban in China to Japan’s efforts to license cryptocurrency exchanges. Others, including the United States and Britain, are still working out their response.