The Financial Stability Board (FSB) has unveiled a comprehensive global regulatory framework for crypto-asset activities, centering around the principle of 'same activity, same risk, same regulation'.

Recent events have underscored the inherent volatility and structural vulnerabilities of crypto-assets and their associated participants. The FSB is particularly concerned that as linkages to traditional finance continue to strengthen, there could be an increase in spillover effects from crypto-asset markets into the broader financial system.

To establish a unified global regulatory foundation, regulatory authorities across various jurisdictions have been advised to adhere to nine key objectives.

The framework is composed of two distinct sets of recommendations. The first set focuses on overseeing crypto-asset activities and markets, while the second pertains to supervising global stablecoin arrangements. Both sets of recommendations were initially put up for consultation in October 2022 and have since undergone revisions in light of significant market fluctuations in the past year. These revisions include stronger measures for safeguarding client assets and addressing conflicts of interest.

During the initial consultation, feedback also brought attention to decentralized finance (DeFi) as an area warranting broader discussion. As a result, the FSB has committed to assessing whether additional policy work is required concerning DeFi and crypto-asset service providers that amalgamate multiple functions. The assessment is expected to be completed by the end of 2024.