Have You SEEN This?! The Crypto Regulations They Want!

Last week the financial stability board Or FSB finally published its Recommendations for Global crypto Regulations this is significant because The FSB is a part of the bank for International settlements or bis the bis Is the bank for central banks around the World this means that the fsb’s Recommendations are more like Instructions for the bis and fsb’s Member countries which is basically all Countries that’s why today I’m going to Summarize what the fsb’s recommendations Say and what effects they could have on The crypto Market if they become law Foreign the document I’ll be summarizing Today is titled quote International Regulation of crypto asset activities a Proposed framework for consultation it Was published by the FSB last week and I’ll leave a link to the full document In the description if you’re interested Now the framework begins with a small Blurb about the FSB wherein the authors Admit that the organization Works Closely with other National and International organizations to set Regulations however the authors are Careful to note that nothing in this Document is legally binding funny next The authors note that all comments about Their regulatory recommendations Regarding cryptocurrency should be Submitted by the 15th of December this

Suggests that these recommendations will Likely not become regulations until Sometime next year in most countries if At all Interestingly the authors provide a list Of questions that the comments should Address these include questions about Crypto questions about crypto markets And questions about stable coins note That they’re looking for responses from Institutions and Rich folks not people Like you and me After the list of questions the authors Provide a brief overview of Cryptocurrency from the perspective of The FSB Not surprisingly they note that Cryptocurrency is extremely volatile and Point to terrorist collapse as proof Though they don’t mention the crypto Project by name They acknowledge that this volatility Isn’t a big deal today since crypto is Not all that connected to the financial System but one that quote the situation Could change rapidly as crypto asset Markets recover in other words the Crypto markets are down so now is our Chance to roll out regulations They then assert that crypto regulations Must be Global because otherwise there Will be regulatory Arbitrage between Jurisdictions this in turn will allow Crypto to continue its innovative growth

Which would cause Financial stability Risks to increase what the authors don’t Mention is that the financial stability Risk that they’re concerned about in This case is that say a novel Algorithmic stablecoin will be invented That displaces the Fiat currencies that The FSB and others are trying to protect The authors then claim that crypto Should be regulated using the same risk Same regulation principle now if you Watched our video about the world Economic forum’s crypto report you’ll Know that this is a phrase that seems to Have come directly from the weft and it Has since been repeated by many other Organizations in this case it’s not Surprising because the FSB is headed by Class not the president of the Dutch Central Bank for context the Netherlands Has been at the center of the wefts Great reset the government actually Published its past correspondence with The weft last year revealing its leading Role Now if you thought that was spooky Consider the following statement Quote high regulatory standards are Required in particular for crypto assets Such as stable coins that could be Widely used as a means of payment and or Store of value as they could pose Significant risks to financial stability Now most of you will know by now that

International Financial organizations Such as the FSB are not fans of stable Coins this is because Sable coins are Direct competition to the upcoming Central Bank digital currencies or cbdcs Being rolled out around the world at Least in theory the spooky part is the FSB also singles out any cryptocurrency That could be a store of value as being An area of concern this is worrying Because bitcoin’s BTC is arguably a Store of value yes BTC is very volatile In the short to medium term but its Ability to preserve purchasing power Long term has been proven Luckily it’s unlikely that the FSB Doesn’t see it that way but it still Begs the question of what could happen When most people start believing that BTC is a store of value not just Seasoned crypto holders it sounds like The FSB and its cronies would move Quickly to crush it as BTC would be a Risk to them If that wasn’t bad enough the authors Call for quote AML CFT defenses across The crypto asset ecosystem This ties into another problematic Outcome of crypto regulation and that’s The requirement to enforce kyc at the Protocol level I.E at the level of the Blockchain itself no kyc no crypto Wallet for the This brings us to the first part of the

Framework and that’s the issues and Challenges associated with rolling out Crypto regulations the authors start by Claiming that crypto is mostly Unregulated which is highly debatable Depending on the country you’re talking About The authors go on to explain that before There can be any crypto regulations There need to be crypto classifications For example what counts as a stable coin What counts as a utility token and so on Naturally the authors take issue with The different crypto classifications Between countries the authors also take Issue with the relative lack of data About the crypto Market it’s still not Entirely clear exactly how many Cryptocurrencies there are how many Trading pairs exist for those Cryptocurrencies nor how much they’re Being traded on both centralized and Decentralized exchanges The authors seem to blame this on crypto Exchanges failing to comply with crypto Regulations as well as the fact that Much of the crypto ecosystem exists Quote outside the regulatory perimeter That’s code for decentralized projects And protocols that exist almost entirely On chain This is strange given that on-chain Activities are incredibly easy to track It just goes to show you that folks like

The FSB aren’t fans of anything they Can’t control using centralized Force Even if they can still see all the Information about it In the next section the authors Simultaneously scrutinize stable coins As being a threat to financial stability Along with D5 protocols they don’t Specify that Defy is what they take Issue with but their wording confirms it Being able to conduct Finance without a Bank is the greatest sin of all That aside the authors suggest that the Ideal way to deal with stablecoin Issuers and other centralized crypto Projects is to essentially break up Their operations into different entities This is because the FSB sees stablecoin Issues exchanges and others as playing Multiple roles that require multiple Regulators rather than have multiple Regulators fight over which one of these Entities it’s allowed to Target the FSB Literally suggests breaking these crypto Companies apart so their different Elements can be regulated separately Pretty crazy stuff Now the second part of the framework Concerns existing initiatives around Crypto regulations both nationally and Internationally the authors start by Saying that the FSB is happy with the Progress being made on crypto Regulations but it’s just not good

Enough They highlight stable coins as being a Point of focus and reveal that the Crackdown on stable coins is due to Concerns around Financial stability this Makes sense when you realize that most Stable coins are pegged to the US dollar And backed by U.S government debt That’s a clear threat to non-usd Countries that’s why usdc issue a circle Is in the process of creating a stable Coin for every major fiat currency its Why circle is slowly becoming the most Powerful company in cryptocurrency and Could eventually become the most Powerful company on the planet more About that in the description Anyways the authors then list a bunch of Other regulatory recommendations that Were recently released by other International organizations these Include the bis which you’ll recall is Behind the FSB as well as the infamous Financial action task force or fat F Which wants kyc applied to all of crypto Now the third part of the framework Details the fsb’s approach to Implementing crypto regulations around The world the authors Begin by repeating The same risk same regulation principle That I talked about earlier they say That all crypto regulations should be Crafted with this idea in mind now this Is a bigger problem than you think

Because it ultimately means that Cryptocurrency should be subject to the Same regulations as the existing Financial system The Practical effect of this is that it Will effectively Force cryptocurrency to Become a part of the existing Financial System this is why the wef and others Have been repeating the same risk same Regulation phrase so frequently in the Context of cryptocurrency they want to Take control of the powerful Technologies that underlie Cryptocurrencies to turn their Anti-human ideologies into a reality This is also why the crypto industry has Been fighting so hard to convince Lawmakers around the world that new Crypto-specific regulations are required That’s because activities in crypto do Not carry the exact same risks as Equivalent activities in the existing Financial system the premise itself is False now this is of no concern to the Authors who insist that any crypto Intermediary which performs a function Similar to that of an entity in the Traditional Financial system must be Regulated in the same way it’s not Entirely clear whether the authors Believe these regulations should also Apply to D5 What is clear though is that the FSB is Obsessed about regulating stable coins

They specify that stablecoin issuers Should be subject to the oversight of Central banks as well as any payment Related regulators Any bank-like features such as earning Interest on stable coins should also be Regulated again it’s not clear if this Applies to D5 but given that Defy is Where most of these yields come from It’s possible that we could see Regulations applied to defy via Stablecoin issuers for example Stablecoin issuers could be mandated to Prevent holders of their stable coins From lending in D5 protocols The authors then propose two things Their recommendations for crypto Regulations which I just discussed and Revisions to their recommendations Regarding stable coins they mention a Few of these revisions here but there’s Only really one that needs discussing Quote The revised recommendations clarified That Reliance on algorithms and Arbitrage activities are not effective Stabilization mechanisms indeed as the Report describes many existing stable Coins including Terror Luna would not Meet the fsb’s high-level Recommendations This needs to be discussed because what The FSB is saying here is that Decentralized stablecoins should be

Banned under its new stablecoin Recommendations This is a really big deal because it’s Believed a robust algorithmic Sable coin Will eventually emerge and serve as a Decentralized medium of exchange the one Algorithmic stablecoin I personally Found quite interesting was Ample Forth’s Ample it automatically adjusts Its Supply based on demand Now the only problems with ample are That it’s pegged to the price of the US Dollar in 2019 it only rebases once Every day and it’s present on exchanges Causes its Peg to deviate if there was a Way to make a token like ample that’s Not pegged to a fiat currency rebases Instantly and exists entirely on chain Then we could actually replace Fiat Currencies with it meanwhile bitcoin’s BTC would continue to serve as a truly Decentralized store of value Well a man can dream Anywho what’s hilarious is that the Author’s note quote all crypto asset Activities that pose or potentially pose Risks to financial stability should Become subject to comprehensive and Globally coordinated regulation Supervision and oversight this is Hilarious because it really includes Every single cryptocurrency that exists Or possibly could exist especially those That threaten the financial status quo

I’ll quickly note that the specifics of The fsb’s recommendations for crypto and Stablecoin regulations can be found in Two other documents those will be in the Description too Speaking of those two documents the Authors provide a table which includes a List of the recommendations it has made For regulating cryptocurrencies and Stable coins what’s annoying is they Don’t list the recommendations here to Find them we must go digging through Those two other Docs The fsb’s recommendations for crypto Regulations can be found in a document Titled quote regulation supervision and Oversight of crypto asset activities and Markets which again is in the Description This document contains nine crypto Regulation recommendations the first is That Regulators should be given the Power by their governments to enforce Regulations against entities in the Crypto industry they should require all Crypto entities to comply with their Regulations before operating in their Jurisdiction and apply punishments when Regulations are violated The second is that all crypto Regulations should follow the same risk Same regulation principle that you’re All familiar with by now this Recommendation includes monitoring the

Crypto industry for emerging risks and Regulating those accordingly this Recommendation also includes a tiny bit About D5 The authors basically say that if There’s a crypto project or protocol That’s too decentralized to be regulated Directly then other measures should be Taken to regulate the D5 protocol by Proxy I reckon freezing stable coins is On the list of options Now the third recommendation is Straightforward as it involves International cooperation on crypto Regulations this includes sharing Information about different crypto Projects and companies so that none of Them can escape the eye of the FSB The fourth recommendation relates to Governance and it requires quote crypto Asset issuers and service providers to Have robust governance structures that Are appropriate for their size now call Me crazy but this suggests that most of The companies that created altcoins will Have to comply it also reminds me that ESG obsessed institutional investors Give Bitcoin a low ESG score because it Can’t be governed that is coerced they Actually don’t care that much about Bitcoin’s environmental impact because They know it’s negligible more about That in the description the fifth Recommendation relates to risk

Management on the part of crypto Companies this includes everything you Might expect including compliance with The fat F’s Infamous travel rule that’s The one where you have to provide Extensive details about every crypto Transaction above a certain amount I’ll Quickly note that the fat F’s own Recommendations have done nothing to Reduce the frequency and volume of Illicit Finance in over 30 years more About that in the description too Now the sixth recommendation involves The Gathering and storage of crypto Related data this recommendation is Mostly pretty boring except for the part Where it says that Regulators will have Complete and total access to all crypto Data Regulators will also publish this Data where they deem appropriate The seventh recommendation involves Disclosures this includes requiring Crypto asset issuers to publish white Papers and crypto intermediaries to Provide details about how crypto is Custarded both parties must provide Disclosures about how their operations Are impacting the environment and the Climate one of these things is not like The others The eighth recommendation is to assess The connections between cryptocurrency And the traditional Financial system This is of course to assess whether

There are any Financial stability risks Involved in any of these Interconnections it even includes Assessing the connections and risks Between crypto niches the final Recommendation is something we discussed Earlier and that’s making sure the Activities of crypto exchanges and Others are being adequately regulated This again includes potentially breaking Up these companies so that their Operations can be regulated by separate Entities and this is all just for Regular cryptos The fsb’s recommendations for stablecoin Regulations can be found in a document Title quote review of the FSB high-level Recommendations of the regulation Supervision and oversight of global Stablecoin Arrangements which is also in The description The first is that Regulators should have Total control of the stable coins Operating in their jurisdictions This includes having the power to shut Them down or restrict access to them in Whatever way they see fit This recommendation seems to include Having the power to go after stablecoin Developers yikes The second recommendation for stable Coins is the same as the second for Crypto and that’s to apply that good old Same risk same regulation principle in

This case that means say regulating Stablecoin issuers as payment services Providers if their stable coins are used For payments the third recommendation is Again the same as it is for other Cryptos and that’s lots of international Cooperation between Regulators regarding Stable coins here the FSB underscores The risks that stable coins for Currencies of developed countries could Have on the economies of developing Countries the fourth recommendation is You guessed it related to the governance Of stable coins and their issuance the FSB specifies that Regulators must have The power to freeze any stable coins in Circulation which is to be expected By now you’ll know the fifth Recommendation relates to the risk Management around stablecoins and this Is where my biggest fears come true That’s because the authors seemingly Confirm that kyc should be applied to Stable coins as well as the travel rule Especially if transactions involve Personal wallets the sixth Recommendation is peculiar because even Though it too involves data collection And storage the FSB seems to suggest That this data should be kept more Private I suppose that’s because they Know the rich don’t want their Stablecoin transactions to be tracked Just my speculation the seventh

Recommendation for stable coins is Different from the one for other cryptos As it involves setting up regulations For contingency plans in case a Stablecoin issuer goes under obviously You want all those Sable coin holders to Be made whole if something like that Happens The eighth recommendation is to require Stablecoin issuers to disclose exactly How their stablecoin tokens are backed How they maintain stability and what Redemption rights holders have this is Probably the only recommendation by the FSB that I can fully get behind What’s odd though is the ninth Recommendation is to require stablecoin Issuers to give holders of their Stablecoin a right to redeem the assets Backing the stable coins they hold this Therefore requires all stable coins to Be backed by high quality reserves AKA Government debt typical Now the final stablecoin recommendation The FSB has is to require all stablecoin Issuers to comply with the first nine Recommended regulations before being Allowed to operate in a particular Jurisdiction This would be reasonable were it not for How ridiculous some of those regulations Are So this brings me to the big question And that’s what the fsb’s crypto and

Stablecoin regulation recommendations Mean if they start to become actual Regulations around the world I’ll start by saying that we won’t be Seeing these regulations rolled out Anytime soon and they are likely to Change too at the end of the FSB summary Document the authors note that these Recommendations won’t be finalized until All the comments from the rich folks Have come in the finalized Recommendations will come sometime in Mid-2023 which is eight months from now Moreover additional recommendations Might be issued to address D5 sometime Next year The authors note that these additional Recommendations will only be made if the FSB decides that defy poses a threat to Financial stability AKA to The Current Financial system spoiler it does More importantly the authors note that The FSB will only begin assessing the Implementation of its crypto Recommendations as regulations in late 2025. this is around the time that the Next crypto bull market will be ending And it’s possible that a Crackdown by The FSB will be a catalyst for the crash In any case these recommendations will Be bad for crypto if they become Regulations that’s simply because they Will crush the centralized elements of The crypto industry and use stablecoin

Issuers as leverage over its Decentralized elements if using stable Coins as leverage in D5 protocols and The like fails to result in the intended Consequence it looks like Regulators Have the green light to go after crypto Developers the Crackdown on tornado Caches developers after the protocol was Sanctioned arguably proves that this is Now on the table The outcome of these regulations will be That crypto becomes integrated with the Existing Financial system and I’ll Repeat that this is the motivation Behind the principle of same risk same Regulation Never mind that bitcoin’s BTC could Become a Target if it’s determined to be A store of value by the FSB the real Question is whether the FSB will succeed In getting every country to turn its Crypto recommendations in to crypto Regulations The fat F’s attempts to turn its crypto Recommendations into regulations Suggests the FSB will have limited Success if you watched our most recent Video about the FED F you’ll know that a Surprisingly small number of countries Have started implementing its crypto Recommendations I suspect it’s going to Be a similar story with those from the FSB this is just because crypto still Isn’t that much of an issue this is what

Makes the crypto bear Market a paradox For Regulators it’s the perfect time for Them to crack down but when they see That the value of the crypto Market is Imploding they probably start to think It’s not worth their time like many Others so it’s safe to say that it’s Going to be interesting to see what the Fsb’s finalized crypto and stablecoin Recommendations look like when they come Out you can rest assured we’ll be Covering those the moment they do until Then let’s hope all The Regulators just Forget about crypto for a bit I mean It’s not like there isn’t tons of other Crazy stuff going on in the world right And that’s all for today’s video about The fsb’s recommendations for crypto and Stablecoin regulations if you found this Information helpful smash that like Button to help me out if you want to Make sure you don’t miss the next video Subscribe to the channel and ping that Notification Bell If you’re looking for more from the coin Bureau head on over to coin Bureau clips For more crypto content like this and Tune in to the coin Bureau podcast for In-depth crypto discussions If you’re looking for more from me Follow me on Twitter tiktok and Instagram and be sure to join my Telegram for daily crypto updates too if You’re wondering what cryptos I hold as

Part of my portfolio and how and why I Change it from time to time subscribe to My Weekly Newsletter to find out And if you want to support what we do Head on over to the coinbure merch store And get yourself some cool crypto Apparel that suits your crypto tastes Links to all these resources and more Will be down in the description thank You all so much for watching and I will See you in the next one till next time My friends this is Guy bidding you Goodbye [Music]

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