S. Maijoor, the chairman of the working group on cryptocurrencies, has urged international authorities to cooperate in regulating cryptocurrency market. Talking to the authorities in the UK, Maijoor thought that cryptocurrency might cause a global finance crisis.
Woken by the FTX
The Financial Stability Board has stepped up its call for international cooperation among financial authorities in response to FTX’s collapse, which sent the cryptocurrency market into a shock wave. The Board advised them to develop regulations that would extend beyond local boundaries.
Observation and making recommendations for criteria for international finance fall under the purview of the international body. Additionally, it is made up of influential finance organizations and major world economies.
According to Maijoor, things will eventually get to the point where they become a threat because of the cryptocurrency market’s explosive growth and structural vulnerabilities. The stability of global finance is threatened by the unregulated growth of cryptocurrencies.
Regulators from all over the world are currently considering tighter requirements. After the recent failure of the FTX cryptocurrency exchange last week, there is a renewed sense of urgency surrounding this issue.
In each of their respective domains, the regulators are all thinking about stepping up their supervision of the cryptocurrency industry.
The necessity of international cooperation
As for the report of Maijoor, the FSB was debating establishing international criteria for cryptocurrency prescriptions. The yearly study of the Board, which was released on Wednesday, confirmed all of Maijoor’s worries about potential dangers to the finance stableness.
The document likewise made note of the fact that many of the structural flaws discovered in the cryptocurrency space are also present in conventional economics.
According to Maijoor, belongings develop and solidify gradually. He made a comparison between the current state of the cryptocurrency market and the three hundred years ago demise of the Bank of Amsterdam.
Affirming once more that the FSB’s objective is to draw lessons from the past. Maijoor serves as an executive member of both the supervisory board of the European Central Bank and the central bank of the Netherlands.
According to him, many crypto markets exhibit high information asymmetry. He believes that many crypto activities take place outside of the law and in violation of regulations. Therefore, national oversight is hampered by the innovation’s transnational nature.