Financial leaders from the Group of Seven (G7) leading economies are reportedly calling for the comprehensive regulation of digital assets.
Reuters reports that a draft communique signed by finance ministers and central bankers from G7 countries Canada, France, Germany, Italy, Japan, the United Kingdom and the US asks the Financial Stability Board (FSB) to speed up the global regulation of cryptocurrencies.
The FSB oversees and makes recommendations for the global financial system. The international body also played a key role in promoting regulatory reforms following the 2008 economic crisis.
“In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board)…to advance the swift development and implementation of consistent and comprehensive regulation.”
The sentiment comes after the collapse of Terra’s UST and LUNA, which both plunged essentially to zero, wiping out tens of billions of dollars of wealth in just a few days.
Last month, European Central Bank (ECB) executive Fabio Panetta also called for global regulations of the crypto space. He compared the crypto space to the subprime mortgage market which triggered the last major financial crisis in 2008 .
“Indeed, the crypto market is now larger than the subprime mortgage market was when – worth $1.3 trillion – it triggered the global financial crisis. And it shows strikingly similar dynamics. In the absence of adequate controls, crypto assets are driving speculation by promising fast and high returns and exploiting regulatory loopholes that leave investors without protection. Limited understanding of risks, fear of missing out and intense lobbying of legislators drive up exposures while slowing down regulation.”
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