All of us are concerned about the ongoing conflict in Ukraine. The international standard setters are no exception and are not immune to the influence of this conflict. Recently the Financial Stability Board (FSB) sent a letter to the G20 highlighting the financial effects of the Russian invasion of Ukraine. What is notable in the letter is the acceleration by the FSB on its work on crypto-assets. The FSB notes that the war has reinforced pre-existing concerns about the growth and potential illicit use of crypto-assets, and that crypto-asset markets are fast evolving and could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system.
The FSB is now moving forward at an accelerated pace in collaboration with standard-setting bodies, including FATF, to work on the regulation and supervision of ‘unbacked’ crypto-assets and ‘stablecoins’. It is also analyzing the financial stability impacts of rapidly evolving Decentralised Finance (DeFi), to help create the necessary conditions for safe innovation. This is already a part of their ongoing workplan, which was also issued earlier this year. Connected to this is the work on digital currencies for use in cross-border payments, which is also a G20 directive and being worked on by the international standard setting bodies.
All of us are trying to figure out how crypto-assets will disrupt and transform our industry. There are still many moving pieces and many uncertainties, particularly with respect to what the role of credit unions will play. What are our responsibilities what operational changes will we need to make, and how can we best serve our members with technology? Fasten your seatbelts as the answers are coming—perhaps faster than we all anticipated.
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