FSB's 2024 Focus on Global Crypto Oversight and AI's Financial Impact

The Financial Stability Board (FSB), an international organization overseeing the global financial system, has unveiled its comprehensive plans for 2024. The FSB Work Programme for 2024 outlines the organization's objectives, which include monitoring the implementation of a global regulatory framework for crypto-asset activities and examining the financial consequences of digital innovations such as tokenization and artificial intelligence (AI).

One of the primary areas of emphasis for 2024 is ensuring the effective execution of the agreed-upon global regulatory and supervisory framework for crypto-asset activities, markets, and international stablecoin arrangements.

In July 2023, the FSB formulated a global regulatory framework for crypto, providing recommendations to the G20 economies. These recommendations require crypto platforms to segregate clients' digital assets from their funds, establish functional separation to prevent conflicts of interest, and promote robust cross-border cooperation and oversight by regulators.

While the FSB's focus remains on crypto regulation, it has also recognized the significance of tokenization projects. The organization intends to complete its work on assessing the financial stability implications of tokenization in 2024. Additionally, the FSB plans to produce a report for the G20 concerning recent developments in AI and their potential impact on financial stability. These efforts will also contribute to strengthening cyber resilience.

The FSB has set specific timelines for these reports, with the report on AI's financial stability implications scheduled for November 2024 and the report on tokenization's financial stability implications expected in October.

Another noteworthy action on the FSB's 2024 agenda is the development of a format for incident reporting exchange (FIRE). This initiative aims to promote greater convergence in the reporting of incidents by financial institutions to monetary authorities, thereby enhancing consistency in cyber incident reporting.

In April 2023, the FSB identified common information requirements among financial authorities to improve cyber incident reporting. It proposed the FIRE format, which standardizes incident reporting by financial institutions, facilitating information exchange among authorities.

The FSB's active role in shaping the regulatory landscape for crypto and emerging technologies underscores its commitment to ensuring the stability and security of the global financial system.