G20 and the Future of Cryptocurrency Regulation
Finance ministers and central bankers from the world’s largest economies belonging to the Group of 20 or G20 are currently in Buenos Aires, Argentina to discuss international financial architecture, tax laws and inclusive growth. And as expected, issues about the cryptocurrency industry did not go unheard as the leaders have proposed a plan of creating common regulation within the year.
Argentina Central Bank chair Frederico Sturzenegger announced that G20 member nations have to come up with specific regulation on cryptocurrency by July to be adopted globally. This comes after cryptocurrencies, especially Bitcoin, have disrupted the global financial sector.
The summit’s official communiqué reads:
“We ask the FSB, in consultation with other SSBs, including CPMI and IOSCO, and FATF to report in July 2018 on their work on crypto-assets.”
However, the July proposal will be a first step in a long process of putting order in the industry as several countries have already started preparing for their regulation in their own turf. Sturzenegger believes that these will just be “baby steps” but will be enough to set the direction of a unified form of regulation.
However, Brazil does not intend to follow the plan according to its Central Bank president Ilan Goldfajn. Citing cryptocurrencies don’t have value and are not good for payments, the Brazilian official expressed his sentiment days before the summit began.
Calls for regulation and opportunities to prevent illegal activities by using cryptocurrencies has also been raised. The agency Financial Action Task Force (FATF) will implement the regulation on crypto-related assets to curtail money laundering and terrorism funding.
But what perked up the market was the G20’s Financial Stability Board’s declaration that cryptoassets do not pose risks to the stability of the global financial sector. Investors were glad to welcome such news after Bitcoin’s dismal performance in the previous weeks.
The countries that are welcoming the idea of regulating the crypto market include Canada, which is pursuing its first Exchange Traded Fund (ETF) and France whose AMF (l’Autorité des marchés financiers) is creating legislation on ICOs to monitor and assess the conduct of companies involved in ICOs.
Traders who believe in cryptomarket deregulation, however, believe that this move by the G20 will definitely affect the prices of cryptocurrencies adversely. Bitcoin, whose price is highly volatile, has been observed to react negatively to rumors and news of stricter regulation by governments.