FSB will standardize global incident reporting for institutions with crypto

The outlook for global financial stability remains challenging, Financial Stability Board (FSB) chair Klaas Knot told G20 finance ministers and central bankers in a letter. The FSB has a plan though, which it outlined  ahead of a meeting of the ministers and bankers Feb. 28-29 in São Paulo. Asset tokenization will be among the areas it concentrates on.

The FSB letter, dated Feb. 20 and released Feb. 26, addressed priority areas that include non-bank financial intermediation, climate change and cross-border payments in addition to digital innovation. “In 2024 we will deliver reports on the financial stability implications of the tokenisation of assets and of AI,” Knot wrote regarding its intended action on crypto.

The G20 policy on a global regulatory and supervisory framework for crypto-assets was endorsed last year. The G20 Roadmap on Crypto Assets was adopted in October based on the G20 New Delhi Leaders’ Declaration passed in July. The FSB and International Monetary Fund collaborated on a Synthesis Paper  where the roadmap was proposed.

The FSB promised to release a progress report on the implementation of the roadmap in October. In addition, it plans to propose a format for incident reporting exchange to make it possible to share information on incidents with multiple financial institutions and agencies at the same time. The letter said:

“Accelerating digitalisation across all parts of finance has improved efficiencies but also increased the interconnectedness of the global financial system.”

“This increases the possibility of a cyber or operational incident at one financial institution having spillover effects across borders and sectors,” it continued.

Other international information exchange frameworks have been proposed, such as the G20’s Crypto-Asset Reporting Framework for tax authorities that was released in October .

The FSB will address Anti-Money Laundering and Know Your Customer as part of its work on cross-border payments.

FSB Chair @KlaasKnot letter to #G20Brazil Finance Ministers and Central Bank Governors outlines the FSB’s work programme during the Brazilian G20 Presidency.
https://t.co/hipdBI4ouy #FinancialStability #NonBanks #cryptoassets #ClimateChange #CrossBorderPayments pic.twitter.com/qGYxOSpbDT

— The FSB (@FinStbBoard) February 26, 2024

The G20 unites 19 countries, the European Union and the African Union. Brazil has assumed this year’s presidency of the G20 from India, which was the first G20 leader to emphasize the need for global crypto  regulation. South Africa will take over the leadership of the G20 in 2025.

The FSB is “hosted” by the Bank for International Settlements as an independent association. It seeks to promote information exchange and international cooperation among financial regulators.

Magazine: 6 Questions for Lugui Tillier about Bitcoin, Ordinals, and the future of crypto