In a speech to the World Bankthe first deputy governor of the BdF trace one trajectory in the field of regulation and supervision from crypto-assets. Purpose: prevent visit drifts from 2022 by imposing rules.
Authorities in the traditional banking world have not failed to pay attention to the crisis episodes that unfolded in the crypto ecosystem last year. And for these, like the Banque de Francethe time has come for regulation and supervision.
In a speech at the World Bank Global Payments Week 2023, Denis Beau announces “the springtime of crypto-asset regulation and supervision “. For the central bank’s first deputy governor, this season follows the crypto winter.
Crypto winter, a springtime for regulators
I don’t know if this winter will last, but I think it should be seen as a springtime for regulators and supervisors, whose initiatives should abound,” he says.
The framework of BdF emphasizes the work being done in “many countries”. Approaches differ, however, even if one trend stands out.
This involves combining two regulatory strategies. The first aims to contain and isolate crypto activities from traditional finance and the real economy.
The second involves regulating the crypto-asset market, “either by assimilating them to traditional financial assets (…) or by adopting dedicated regulations (e.g. on stablecoins).”
With the exception of China, the world’s major economies and currency zones have developed, or are in the process of adopting, a combination of the latter two approaches, based on the principle of same activities, same risks, same rules, explains Denis Beau.
Financial and cyber integrity risks.
To regulate effectively, the central bank representative advocates targeting specific risks. And these are not necessarily new. The FTX collapse confirms this. Infrastructures and crypto activities are exposed to credit, liquidity and market risks.
The crypto also poses more specific risks, amplifying traditional vulnerabilities and creating new ones. In particular, the executive cites financial integrity and cyber risks. What’s more, stablecoins carry their own risks,” adds Denis Beau.
These risks therefore require “a convergent and coordinated regulatory response”. In Europe, this response is called MiCA. An important step, but not enoughjudges the BdF executive.
DeFi and crypto conglomerates must be dealt with
The European framework will need to be supplemented “over the next few years with additional requirements.” Future developments will aim in particular to regulate DeFi. However, the regulatory response requires another feature.
These regulatory issues are global, which means we need to ensure that national regimes are consistent with each other to avoid any risk of regulatory arbitrage. To this end, we need to accelerate international work,” encourages the Senior Deputy Governor.
In his view, two issues in particular justify the globalization of the response. These are DeFi and the existence of “crypto conglomerates on a global scale.” These providers require “identifying and monitoring the risks associated with the concentration of their activities.”
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