The Financial Stability Board (FSB), an international financial regulatory authority sponsored by the Bank for International Settlements (BIS), has identified significant obstacles in cross-border cryptocurrency regulation, emphasizing privacy concerns as a major impediment. In a comprehensive 107-page peer review report published on Thursday, the organization pointed to persistent regulatory gaps and coordination difficulties among global jurisdictions.
According to the FSB, these inconsistencies have resulted in regulatory arbitrage, data insufficiencies, and market fragmentation across the crypto ecosystem, which includes Bitcoin, stablecoins, and other digital assets. One core issue is the fragmented supervisory landscape, where multiple regulatory bodies within individual countries implement varying frameworks and enforcement mechanisms. This complexity is intensified by differing privacy laws that restrict the sharing of critical data between nations.
The report underscores that data confidentiality laws often hinder efforts to identify potential systemic risks and supervise crypto activities that cross international borders. Some jurisdictions impose strict limitations on local companies’ ability to share information with foreign regulators, creating barriers to effective cooperation.
The FSB notes, “Secrecy or data privacy laws may pose significant barriers to cooperation,” which can lead to delays or outright refusals in responding to cross-border regulatory information requests. These challenges reduce the effectiveness and timeliness of international supervisory collaboration in the rapidly evolving crypto market.
The regulator also highlights reluctance from certain market participants to disclose sensitive information due to concerns over confidentiality breaches and the absence of reciprocal protections abroad. Such hesitations further complicate international regulatory coordination and monitoring efforts.
Beyond privacy issues, the FSB points out ongoing problems related to the availability and reliability of crypto-related data. While authorities increasingly depend on commercial data providers and surveys, these sources often lack the accuracy, completeness, and consistency necessary for robust oversight.
The report reflects, “Regulatory data sources remain limited, prompting authorities to rely heavily on commercial data providers, surveys, and other incomplete or fragmented data sources.” Notably, the FSB had raised similar concerns about data quality nearly four years ago, suggesting limited progress in this area since then.
These findings arrive as the global cryptocurrency market continues to expand and integrate with traditional financial systems, placing greater emphasis on coordinated oversight to mitigate risks to financial stability. Addressing privacy-related barriers and improving data accuracy are seen as crucial steps toward enhancing international regulatory cooperation.
Despite the detailed analysis, the FSB report does not propose specific solutions to overcome privacy constraints or data challenges. Cointelegraph reached out to the FSB for additional comments on possible measures to address these issues but had not received a response prior to publication.
As governments and international bodies work to align crypto regulatory standards, the tension between safeguarding personal data and ensuring transparent supervision remains a key consideration shaping policy outcomes.
