Benoît Cœuré: regulators likely to agree on crypto framework in 2022 – FT

Cœuré commented that the boom of decentralised finance (DeFi) throughout 2021 has been something of a “wake up call.”

The new avenues and opportunities presented by DeFi create new forms of systemic risk that can no longer be ignored by regulators, he continued.

“These [new] services will be competing with traditional finance, and money will flow in and out from one universe to another. This creates a compelling reason to start a discussion on global principles for crypto regulation.”

He added that given the pace at which various jurisdictions are progressing along independent timelines in developing their regulatory frameworks, there is a real risk of inconsistency on a global scale. Cœuré explained that the Financial Stability Board would be a logical body to oversee this global framework.

“That’s a risk that should be avoided and there’s still time to avoid it.”

Caveating the point, Cœuré recognised that vastly different thresholds for privacy exist across these jurisdictions and may limit the scope for a global structure. “The final decisions of sovereign states will be . . . a balance between sovereign strategic considerations on the one side and considerations about the good functioning of the financial system on the other,” he said. 

“That’s not new, it’s just that . . . these balances are shifting because technology is so important. The new risk is governments raising technological fences which create fragmentation in the global financial system.”