The need to better understand the economic activity that revolves around cryptocurrencies, is making a relevant issue and is beginning to be adopted in the agendas of multilateral organizations to be treated. This is the case of the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI), who presented a complete report on the need to monitor the cryptography and its impact on the economy, to the finance ministers of the G20 and the heads of the central banks of their respective member countries.
The report focuses particularly on the transmission channels through which the markets for cryptographic assets develop, which can give rise to risks of financial stability at any given time.
This report was accompanied by a series of recommendations from the FSB, a coordinating body for international financial regulation, which, among other aspects, mentioned in a statement that monitoring the size and growth of the cryptographic asset markets is a task of primary importance for understand the magnitude of the impact that their fluctuations can have on the economies of the countries.
Certainly monitoring the behavior of these markets is essential. Having measurable and ponderable bases is one of the needs to be able to project realistic scenarios around the impacts of the price fluctuations of cryptocurrencies.
The monitoring recommendation report contains comparisons of the behavior related to volatility and market correlations between the main cryptocurrencies with other classes of assets of value such as gold, different currencies, stocks, market behavior, all in a comparison in terms of size, growth and price levels of the main cryptocurrencies.
Knowing the behavior of cryptocurrencies with measurable bases is essential, however incorrect and arbitrary data mean a barrier for the supervision, measurement and understanding of cryptoactives. The report in that sense explains that metrics on prices, trading volumes and volatility of cryptocurrencies can be manipulated by illegal practices such as washing and spoofing, and pump and dump, which muddies any attempt at study and analysis.
On the other hand an important shadow falls on the cryptographic activity, and that is what consider that the cryptoactives protect the money laundering and the financing of terrorism, and pose important problems of protection to the consumer and the investor by the characteristics of anonymity and encryption of transactions, which is a paradox since they are the main strengths of cryptocurrencies.
The role that organizations like the FSB can play in the identification of the risks of cryptographic activity, as well as the approach of solutions to prevent and in some way mitigate the risks that users and investors may run, as well as to promote protection of these, the integrity of the market and the financial stability of the countries, is an aspect that appears in the report as a recommendation.
