The FTX collapse spurred action from a global financial watchdog to give recommendations to regulate the crypto industry early in 2023. 

The Financial Stability Board (FSB), an international organization that monitors the global financial system, has reportedly stated that it will be laying out steps to regulate crypto next year. According to Dietrich Domanski, the outgoing secretary-general of the FSB, recent events have highlighted that it’s “urgent to address risks” within the space. He explained:

“Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating.”

Domanski also noted that the goal of creating recommendations for crypto regulation will be to hold crypto projects “to the same standards as banks” if they are giving similar services as banks.

With the recent collapses of major cryptocurrency projects like Terraform Labs and FTX exchange, global policymakers have received criticisms about allowing FTX to expand before blowing up. According to the FSB official, such rules and standards would have prevented events like the Terra and FTX collapse since they wouldn’t have met the “criteria for sound governance.”

In the months ahead, the FSB is planning to create a timeline for global regulators to implement the initial recommendations. After providing recommendations, rules agreed upon at the FSB can be put into law by various national and regulators.

Related: Industry execs voice confidence in DeFi adoption despite security flaws

Meanwhile, the former CEO of FTX, Sam Bankman-Fried, was recently arrested by the Royal Bahamas police and is set to be extradited to the United States. The arrest follows a formal notification by the U.S. government that it has filed criminal charges against Bankman-Fried. Charges include wire and securities fraud, money laundering and conspiracy to commit wire and securities fraud.

Hours before the arrest, Bankman-Fried denied that he was part of a “Wirefraud” chat group that was allegedly made up of FTX executives. The group was allegedly used to exchange information about FTX and Alameda Research’s operations.