Adan Responds to the FSB’s Consultation on the Regulation of Crypto-Asset Activities

On December 15, ADAN submitted a response to the Financial Stability Board’s (FSB) consultation titled “International Regulation of Crypto-asset Activities.”

In summary, ADAN thanks the FSB for consulting with stakeholders in the crypto-asset sector to develop an effective regulatory framework that ensures crypto-asset activities are subject to comprehensive regulation commensurate with the risks they pose to financial stability, while harnessing the potential benefits of the underlying technology.

Since its founding in 2020, the Association has consistently supported the development of international standards for this new asset class, whose activities are inherently cross-border in nature.

As crypto-assets have seen exponential adoption by people around the world over the past several years, the FSB has a fundamental role to play in making the sector more responsible and ensuring that the risks this new asset class may pose to financial stability are effectively addressed through proportionate standards for the sector and effective coordination among all nations worldwide.

In summary, here are the main points Adan made:

• The principle of “same activity, same risk, same regulation” should be applied with caution when it comes to crypto-asset markets, particularly decentralized finance—which is mentioned several times in the report—which requires a new regulatory approach and whose risk assessment and regulation demand a paradigm shift.

• ADAN agrees that the FSB’s recommendations on crypto-assets should apply to all types of crypto-asset-related activities, including stablecoins, while certain activities—particularly those related to global stablecoins (GSBs)—should be subject to additional requirements.
  The recommendations on crypto-assets are sufficiently broad and proportionate to be applied to these assets, while many of the requirements proposed by the GSB are already implemented at the European level, demonstrating that they can be effectively implemented globally to ensure the consistency of these inherently cross-border markets.

• However, the definition of a global stablecoin (GSB) could be further refined to leave less room for interpretation by FSB member states. Indeed, while the recommendations are appropriately broad and proportionate, explicit definition criteria—particularly through thresholds—are necessary to avoid regulatory disparities and ensure the same level of safeguards for financial stability across different jurisdictions.

• While the report provides a fairly comprehensive overview of recent developments in the stablecoin markets, ADAN notes that these events should not call into question the value proposition of stablecoins or the opportunities they offer to users. Furthermore, it would be appropriate for the report to examine the regulatory treatment of crypto-asset-backed stablecoins, as well as new forms of hybrid algorithmic stablecoins and the development of euro-backed stablecoins.

ADAN remains available to FSB members to discuss this document and to organize technical exchanges with its members regarding the proposed recommendations.