In a significant move, the UK’s Financial Conduct Authority Chief Executive Andrew Bailey will oversee global crypto regulation as he takes on the role of FSB chair. The G20 has tasked the FSB with coordinating a regulatory framework for crypto-assets, and Bailey’s experience in fostering collaboration and regulating stablecoins makes him well-suited for the task.
The Group of Twenty (G20) has tasked the Financial Stability Board (FSB) with coordinating the delivery of a regulatory framework for crypto-assets. In July 2023, the ‘regulatory framework for crypto-assets and global stablecoin arrangements’ were finalised by the FSB, which have characteristics that may make threats to financial stability more acute.
Crypto regulation has undergone significant changes since its inception.
In 2013, the US Treasury Department introduced guidelines for virtual currencies, followed by the introduction of the BitLicense in New York State in 2015.
The European Union's Fifth Anti-Money Laundering Directive (AMLD5) was implemented in 2020 to regulate crypto transactions.
As of 2022, over 150 countries have established some form of crypto regulation, with many more expected to follow suit.
Key Experience in Crypto Regulation
Andrew Bailey, currently chair of the FSB’s Standing Committee on Supervisory and Regulatory Cooperation, has a proven track record of fostering collaboration. He led recent key FSB reform initiatives, including those related to crypto-assets and non-bank financial intermediation. In this position, ‘Bailey oversaw the development of the FSB’s global regulatory framework for crypto-asset activities’ and the crypto-asset implementation roadmap.
Andrew Bailey is a British economist and banker.
He was born on October 22, 1959.
Bailey served as the Deputy Governor for Monetary Policy at the Bank of England from June 2011 to March 2020.
He took office as the Governor of the Bank of England in March 2020, succeeding Mark Carney.
Bailey holds a degree in Economics from the University of Cambridge and a PhD in Economics from the University of Cambridge.
Bailey is also well-known for his work on regulating stablecoins, tokens tied to other assets that could affect financial stability. The Bank of England (BoE), under his leadership, has been exploring a digital pound and is looking to regulate stablecoins. Last year, it announced plans to carry out a series of central bank digital currency and distributed ledger experiments.
Regulatory bodies worldwide are taking steps to address concerns surrounding stablecoins, a type of cryptocurrency pegged to the value of a fiat currency.
In July 2022, the US Securities and Exchange Commission (SEC) charged Paxos with violating securities laws by issuing 'Binance USD', a stablecoin.
The European Union's Markets in Crypto-Assets Regulation (MiCA) aims to regulate stablecoins, requiring issuers to disclose information on their reserves and risk management practices.
As the use of stablecoins grows, so does the need for clear regulations.
Recommendation for FSB Chair
The FSB’s Nomination Committee agreed to recommend that Bailey take on the role of chair for a three-year term, starting from the beginning of July. ‘Klaas Knot, President of De Nederlandsche Bank and current FSB chair’ praised Bailey’s experience, stating that he has a proven track record of fostering collaboration. This positions him well to guide the FSB forward, with a focus on ensuring the successful implementation of agreed reforms.
Bailey will succeed ‘Klaas Knot, whose term as FSB chair ends in June’. The nomination is seen as a significant development in the global regulatory efforts for crypto-assets and financial stability.
