Financial Stability Board Suggests New Asset Class for Crypto-Assets

On July 16, 2018, the international Financial Stability Board published a report in which it proposed that a new asset class be established under Basel III for crypto assets. The report was done for the G20, and made clear that the FSB does not see crypto-assets as posing a material risk to global financial stability at this time.  But the FSB has supported development by standard setting bodies of a framework for crypto-assets, including a new, separate category under Basel III to allow monitoring of risks from exposure to crypto-assets.  The FSB noted that the Committee on Payments and Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have found that “first generation” crypto-currencies that are totally decentralized and do not represent a claim or underlying asset “make for unsafe money”.  But a central bank issued digital currency – presumably as a legal tender – would be entering “uncharted territory” at this point.