Cryptocurrency seems to be taking its place in world economics. The latest move by the G20 and Financial Stability Board (FSB) to meet over cryptocurrency regulation illuminates the trend of cryptocurrency’s growth and influence on global economy. There is now a need to reach a agreement on global cryptocurrency regulation.
G20’s Agenda
There is an agenda within many G20 (Group of 20) member economies to push for consistency with cryptocurrency regulation in different countries and for the establishment of an international cryptocurrency regulation agreement among G20 financial regulators. Member countries and entities of the G20 include countries such as the United Kingdom, United States, China, and European Union (EU).
What is the FSB and Its Agenda?
There are many international organisations that are closely affiliated with the G20. One of these is the FSB which is based in Basel, Switzerland. The FSB is also closely affiliated with the Bank of International Settlements (BIS) and the Basel Committee on Banking Supervision (BCBS) both which are also based in Basel, Switzerland.
The purpose of the FSB is to promote international financial stability by coordinating financial regulation policies set by financial institutions and regulatory authorities in different countries.
The FSB includes representation from central banks, ministries of finance, and regulatory authorities from all G20 countries. In addition to this, it also represents Hong Kong, the Netherlands, Singapore, Spain, and Switzerland.
Hong Kong as a “Country”
While Hong Kong is not an actual country it has special status as such and is thereby represented by the FSB. This is the case, even though, Hong Kong it technically already a member of the G20 through the membership of China. However since Hong Kong retained its independent currency, monetary system, economy, legal system, customs regulations, trading relationships, and immigration policies, it has its own FSB representation by institutions such as the Hong Kong Monetary Authority (HKMA).
The Role of the FSB in Global Cryptocurrency Regulation
The FSB has been closely monitoring the size and growth of the cryptocurrency markets and the value of cryptocurrency assets both regionally and globally for several years. its conclusion is that cryptocurrency does not pose a risk to global financial stability. However it concluded that there is a strong need for a consistent global approach to regulation of the cryptocurrency market. There is a need to increase the transparency of cryptocurrency transactions and to effectively combat issues relating to cryptocurrency being used for purposes of money laundering and crime. Concurring with the FSB, the BCBS sees cryptocurrency as an important economic factor that need to be taken into consideration.
Finance Ministers and Central Bank Governors from G20 countries are due to meet at the 2018 G20 Summit in Buenos Aires, Argentina later this year. In order to achieve an International Cryptocurrency Regulation Agreement, consensus must be reached between the financial regulators of G20 and FSB members. Reaching a consensus for an agreement of this kind is a process that can often take months or even years of negotiations.
Conclusion
Cryptocurrency has largely been monitored by regulatory bodies. Laws were slowly introduced. As cryptocurrency assets, as they are often referred to as by government bodies, have started taking a more substantial role in the financial world. This has probably prompted the move for a standardized approach to cryptocurrency regulation and a formal Cryptocurrency Regulations Agreement.
