Global financial stability regulator signals crypto rules are coming soon

The Financial Stability Board – the organisation charged with recommending useful changes to the global financial system – has signaled it will soon propose regulations for cryptocurrencies and other digital assets that make them subject to the same rules applied to traditional financial instruments. News of the Board's …

[JimboSmith]

A former non tech colleague of mine told me a few days ago that they’d invested in “crypto”. They’d done so because the price had dropped dramatically and they were getting in “cheaply”. I tried explaining that this was a very risky thing to do and that there was a good chance they’d not see that cash back. When I said that they said this was different and they’d be okay and tried to change the subject. I said it was a gamble and he said my “investments” were also a gamble, the difference being mine are in diversified portfolios and lots of different companies and assets. This is a sensible individual who thinks that by buying whatever it was they did that they’ll be rich asap. The fact that it’s decentralised came up along with all the usual stuff.

I guess any regulation however light can’t hurt. I’m hoping he hasn’t “Invested’ more than he can afford to lose.

[Anonymous Coward]

First of all who is the

Global financial stability regulator?

And have they been paid to issue a “report” that seems to be a summary of all that has been said before by people I have mostly heard of?

Maybe they are a “Gartner” subsidiary?

Ishy

[doublelayer]

Re: First of all who is the

I had to look them up too. Unfortunately, they don't get a good acronym because "FSB" is already inexorably linked in my mind with Russia's criminal investigation service. The group was set up as a G20 facility, also including the European Commission, and although it doesn't have authority to make any binding decisions, it works with the other international economic institutions like the IMF and WTO which do.

How much this means to you I can't say, but at least you know who they are now.

[Clausewitz4.0]

Re: First of all who is the

I also saw FSB and thought what the heck !

[dajames]

Re: First of all who is the

"FSB" is already inexorably linked in my mind with Russia's criminal investigation service.

I thought "Front-Side Bus" ... but perhaps I'm just showing my age ...

[Anonymous Coward]

Re: First of all who is the

They're a Swiss office with people in them saying *weak* stuff for the G20. Here, their talk of "regulating and supervising"..... oh fook off. You do not supervise a fraud. You do not give fake governmental backing to fake currencies.

It would be like letting someone print fake dollars and pretend they are real dollars.

Conmen1: "Here... our dollar coins are worth $1 USD, pegged by dollar assets, stable, safe. We'll call them USD stable coins even."

But they don't hold dollars, they hold a different conmans crypto which has a dollar price on some market. They're not "stable" or "pegged" or backed by dollars.

Fake transactions drive up the fake asset price of crypto2 when trading is thin, so conmen1 can now mint more coins. If his fake reserve was worth $1 billion and is now worth $2 billion, he can double the quantity of coins.

With these new coins he can use some (e.g. 100 million), to buy more of conman2 crypto2, again when crypto2 is thinly traded, further driving up the price, and with it, the fake value of the reserve under his own coin, letting him repeat the cycle, and issue more coins.

Thus a circle of fraud is created, an 'asset' apparently increasing in price small high price buying when thinly traded.

Along comes our mark, he uses actual dollars to buy this "crypto", conmen1 and conmen2 now can dump some of their fake asset on our mark and take their actual dollar profit.

Here this is a simple 2 step:

1) A crypto 'asset' whose *price* is driven up by people with an interest in creating a false perception of value.

2) A coin, whose *supply* quantity can be driven up by fake buying of the crypto assets used as its reserve.

NFT's can be used as the fake asset to add a level of obsfucation to the con. 3 or 4 or many multiple and varied paths used to hide the fraud.

It's all the same shit from the same people. Worthless shit of no value. Our marks money was extracted and spent on cars and houses and holidays by the conmen. He thinks he bought something of value that he doesn't quite understand, some sort of blockchain thing that newspapers mentioned, but he's been conned. It didn't require any blockchain to do this con, and the coins are controlled by the issuer anyway, but he doesn't yet realized he's been conned.

[Oglethorpe]

How?

Unless governments are willing to invest large amounts in computers capable of 51% attacks for PoW and buying majority stakes in PoS coins, they're not going to be able to exert control (short of locking down the Internet as tightly as China).

[Anonymous Coward]

Re: How?

Unless investors live on ships in international waters (probably in some self-declared micronation), they owe plenty of paperwork to the government of the place they live in.

Governments don't need absolute control to exert influence.

And remember, the FBI is one of the top 10 bitcoin owners, they could easily crash its value by dumping some of their wallet.

[Blank Reg]

Re: How?

if enough of the governments from the big economies decide to kill crypto then it's dead. They just need to declare then none of their banks can have anything to do with crypto, nor do any business with any financial institution that does.

[Oglethorpe]

Re: How?

Kind of like how banks aren't allowed to have anything to do with illegal drugs, content piracy or other proceeds of crime?

[doublelayer]

Re: How?

They can do various things if they were motivated enough, although I note this was mostly about stablecoins which is not what you were talking about. If they did something as basic as saying that cryptocurrency couldn't be bought or sold by companies under their regulations, that would stop most retail investing. They have many more steps they can take if they want a more drastic change. They don't have to destroy something absolutely, just cause enough problems that it declines.

[Oglethorpe]

Re: How?

Stablecoins strike me as a great idea that can't survive contact with reality. That is, it makes sense for people who want total ownership of their money without the volatility of standard crypto but there's no clear way to implement it in a way that isn't just handing over control to a central authority. As an added 'bonus', it smashes together issues that would ordinarily be exclusive to either crypto or fiat.

[Clausewitz4.0]

Re: How?

Honestly, they cannot.

NSA/FBI cannot tap in EVERY fiber. NSA/FBI cannot make a MiTM in EVERY VPN connecting brokers to an exchange in another country, converting to fiat currency in pre-paid cards of another country.

They can put some millions in the pockets of a few politicians, hoping their goal will be achieved in-between the election cycle, but politicians tend to change every 4-6 years, so... no !

[doublelayer]

Re: How?

"NSA/FBI cannot tap in EVERY fiber. NSA/FBI cannot make a MiTM in EVERY VPN connecting brokers to an exchange in another country, converting to fiat currency in pre-paid cards of another country."

I only specified one action they could take in my post, and it doesn't require them to do any of that. You can keep that running if you like, but many people who currently invest in cryptocurrencies don't want to run their investments like a criminal operation. I don't know what your suggestion is for how they get their fiat into the other country to start investing it, nor how they file that for their taxes, but even if we assumed that was simple, the barriers of "illegal in this country" and "you have to jump through hoops to use another country" would be somewhat effective.

If governments decide to kill cryptocurrency worldwide, they have some large challenges in their way. If they decide to make cryptocurrency much smaller in their economy, it's not so challenging.

[Michael Wojcik]

Re: How?

Exactly. Governments can no more completely eliminate cryptocurrency than they can eliminate private parties from agreeing to use Monopoly money as a token of value.

What they can do is cause a great deal of grief for organized cryptocurrency operations, such as the parade of failing DeFi and cryptocurrency-exchange businesses. And they can impose taxes on cryptocurrency transactions and investments (as some already do); cryptocurrency holders who don't comply risk corresponding consequences if they're caught.

Obviously all economies have a lot of underground activity – some more (proportionally to legitimate activity) than others. But underground activity comes with increased risks and costs, so pushing cryptocurrency underground would reduce its overall share of the economy, and make it less appealing to the sort of ignorant investors who pumped it up and then lost (notional) money in the crash.

[Alan Bourke]

If it reduces the crypto bro count

it's all good.