During the world G20 summit held in Argentina, the world’s economic leaders sought proposals for cryptocurrency regulation. The proposals should be submitted by July 2018 to the G20 communique. The G20 acknowledges the importance of the technological innovation behind the crypto assets and points out that it has the potential to improve the inclusiveness and efficiency of financial systems, and the economy as a whole. The communique also sees cryptocurrencies as crypto-assets and not as currencies.
According to the G20 communique, cryptocurrencies raise issues that involve the protection of the investor and consumer, market integrity, tax envision, terrorism financing and money laundering. Global regulators have echoed these issues in the past.
In the meantime, before regulations can be implemented, the G20 members pledged to use the standards of the Financial Task Force; an intergovernmental organization that has been formed to fight terrorism financing and money laundering. The statement points out that the members were committed to applying the regulations to crypto-assets and were looking forward to the review of the standards. The statement also extended a call to Standard Setting Bodies to continue monitoring crypto assets and their risks according to their mandate; and use the responses needed to keep them in check.
The discussion’s inspiration can be said to have come from Germany, France, Japan and the US, who have in the past sought for the regulation of the industry.
Government officials and central bankers from these countries have in the past advocated for the closer regulation of crypto assets, due to the impact these assets could have on investors, crime, and the global economy. The German and French finance officials noted in a joint letter that cryptocurrencies could lead to substantial risks for investors. The US treasury secretary, Steven Muchin, together with an unidentified Japanese government official, also expressed their concerns that crypto asserts could be used to fund illegal activities.
The regulators, however, agreed that crypto assets were not a threat to global financial stability at this time, especially due to the industry’s overall market cap. Crypto assets make up less than 1 percent of the world Gross Domestic Product, and the credit swaps were the same in relation to the world GDP in 2008.
A public document that was provided before the meeting showed that technology behind crypto assets had the potential to enhance financial inclusion. However, there was a need to understand the impact of innovation on financial stability and its potential uses in illegal activities such as tax evasion, money laundering, and the financing of terrorist activities.
Some of the regulators that attended the meeting called for a universal set of regulations that could be enforced by every nation. However, it is not clear if these regulations will ever occur.
However, not all countries share the regulation of cryptocurrencies as in Brazil, for example, it has already been announced that crypto won’t be regulated.
At the end of the communique, it was clear that proposals for regulations in the crypto industry are to be submitted by July 2018.
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