To this end, we need to speed up international work under the aegis of the FSB. Highest priority should be given to the finalisation of the FSB recommendations on stablecoins and other crypto-assets, in cooperation with other international standard-setting bodies (CPMI, BCBS, FATF). The second priority should be to regulate the interconnection between the traditional financial system and the crypto-asset market in a secure way. The timely and faithful implementation of the Basel standards on the prudential treatment of banks' crypto-asset exposures, published in December 2022, will be key from that perspective. The development of crypto-asset based services in banks must take place within a prudent framework that limits the risks for financial stability. Consequently, the enforcement of prudential standards should strictly take into account the developments of interconnections between crypto-assets and regulated entities, such as banks. Lastly, two new issues will require a global regulatory response. DeFi is the first one: its use of public blockchains and its global reach make it difficult to allocate  3/4  BIS - Central bankers' speeches  responsibilities and impose strong regulatory requirements such as in MiCA. But the FSB is working on it: it has already published a report on DeFi's vulnerabilities and policy work is in progress. Second, we need to address challenges raised by worldwide crypto conglomerates. The FSB has also initiated work on this type of crypto-asset service providers to identify and monitor the risks associated with the concentration of their activities.
To conclude, let me just stress that it is not clear to me what is going to be the future of the crypto ecosystem and the shape that the financial landscape will eventually take as a result. Market forces will decide. But what is clear to me is that, for the crypto ecosystem to overcome the confidence crisis it is currently facing, and to develop on a sustainable basis, a confidence prone regulatory and supervisory framework is needed. Central banks have an important role to play in helping develop that framework, and in facilitating a very much needed convergent and coordinated framework at the international level. Thank you for your attention. 4/4  BIS - Central bankers' speeches