Regulation is coming to Cryptocurrencies by the G20 Countries.
G20 chose July deadline for the first step toward unified regulation of cryptocurrency.
Meeting Dates
July 30–31, 2018 — Buenos Aires, Argentina
G20: 2nd Meeting of the Task Force on Digital Economy
3rd Meeting of Finance Ministers and Central Bank Governors
Buenos Aires From 21 July 2018 to 22 July 2018
G20 points to Financial Action Task Force (FATF) — an intergovernmental body formed to fight money laundering and terrorist financing — to cryptocurrency, for recommendations on how to regulate digital assets within each country.
“We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.”
Though during the last meeting it was noted that cryptocurrencies are less of a treat . — “Cryptocurrencies make up less than 1 percent of the global gross domestic product (GDP), he said, while credit default swaps were equal to the global GDP in 2008”
below are some the FATF Recommendations though this recommendations are since 2014 , I find them valid till today.
- “When assessing the ML/ TF risk of convertible VC, the distinction between centralised and decentralised VC will be one key aspect. Due to anonymity and the challenges to conduct a proper identification of the participant, convertible decentralised VCPPSs in general may be regarded of higher risk of ML/FT which would require the application of enhanced due diligence measures. “ “According to this risk assessment, countries should decide to regulate exchanges platforms between convertible virtual currencies and fiat currencies (i.e., convertible virtual currency exchangers). Some countries may decide to prohibit VC activities, based on their own risk assessment (including, e.g., uptake trends) and national regulatory context in order to support other policy goals not addressed by this Guidance (e.g., consumer protection, safety and soundness, monetary policy). Where countries consider prohibiting VCPPS, they should take into account, among other things, the impact a prohibition would have on the local and global level of ML/TF risks, including whether prohibiting VC payments activities could drive them underground, where they will continue to operate without AML/CFT controls or oversight. Regardless of whether a country opts for prohibiting or regulating VCs, additional measures are useful to mitigate the overall ML/TF risk. If a country decides to prohibit VC activities, additional mitigation measures would include identifying VC providers that are operating illegally in their jurisdiction and applying proportionate and dissuasive sanctions to them. Prohibition would still require outreach, education and enforcement actions by the country. Countries would also need to take into account the cross-border element of VCPPS in their risk mitigation strategies. “
Here FATF recommends differentiating between centralized and decentralized virtual currencies and insisting on very strict AML/CFT rules for exchanges, and they warn against outright ban due to anonymity and the challenges to conduct a proper identification with VC,which might escalate underground activities and are hard to regulate.
2. “countries should consider undertaking short- and longer-term policy work to develop comprehensive regulation of VCPPS if widespread adoption of VC occurs.”
3. “directs countries to register or license natural or legal persons that provide MVTS in the country, and ensure their compliance with the relevant AML/CFT measures. “ Money Value Transfer System, this is a red flag for Tether/bitfinex might have issue here the will need to be registered and licensed. “Because convertible VC exchangers that transfer value digitally, via the internet, are not subject to territorial boundaries and generally offer VCPPS to persons in countries in which they are not physically present, it is very important that all home countries apply domestic licensing or registration requirements when required by the FATF Recommendations. For the same reasons, proper oversight by the home jurisdiction and adequate cooperation and information exchange between competent authorities between jurisdictions where the entity provides services is of high importance. “
Conclusion:
Outright ban will likely not happen having had FATF advise against it, but like we are already see in South Korea and Japan , strict KYC , ML, and TF rules are to be expected at all levels of exchange .The treat of VC is in its decentralization and anonymity, so Governments wouldn’t want to escalate things by not handling them properly.
That said the sell off since march might be due to the expected outcome of this meeting, in other words, there might be some relief or hysteria due to the outcome of the meeting , probably why the sell-off is happening.
Reference
Table of Acroynms
VCPPS VC payment products and services
VC Virtual currency
ML Money laundering
TF Terrorist financing
CFT Countering the financing of terrorism
MVTS Money Value Transfer System
