G20: Presumably No Global Regulations Of Bitcoin And Cryptocurrencies
Although Germany, France and Japan have pushed for more stringent regulation of cryptocurrencies, there seems to be no consensus to discuss radical measures at the upcoming G20 summit 2018. However, cryptocurrencies will still be a hot topic.
Once a year, the leaders of the world's top 20 nations meet for the G20 summit. It will be attended by heads of state and government, finance ministers and central bankers, as well as representatives of the EU, IMF and OECD. So the most important for the world economy politicians. This year the summit will take place in Buenos Aires, Argentina, at the end of November.
In the run-up, the participating nations try to agree on how to use the scarce time to nail their nails, rather than just disagreeing. Cryptocurrencies have been mentioned over and over again in the discussions about the content of the deliberations that have been going on for some weeks now. Japan announced that it would urge other countries to adopt joint measures to prevent Bitcoin and other cryptocurrencies being used for money laundering. Germany and France have recently even announced a joint proposal to regulate cryptocurrencies.
These announcements gave rise to the wildest doom calls. The Wired has already speculated that the G20 community will ban anonymous cryptocurrencies such as Monero, Dash and Zcash globally, while the Handelsblatt speculates that "the G20 nations may bring the big crypto ban next week," and so on.
Now, the Financial Stability Board (FSB) has probably put a stop to this speculation. The FSB is an international body that monitors the global financial system and provides policy advice. The institution has recently communicated its priorities for the summit to the Argentine G20 presidency, and one may assume that this proposal will not be taken lightly.
- Vigilant monitoring to identify, assess and address new and emerging risks.
- Disciplined completion of the G20’s outstanding financial reform priorities.
- Pivoting to policy evaluation to ensure the reform programe is efficient, coherent and effective.
- Optimising how the FSB works in order to maximise its effectiveness
Cryptocurrencies play a big role in this. "To address the concerns of its members, the FSB has examined whether the rapid growth of crypto assets threatens the stability of the financial system."
The answer of the FSB is NO. "Crypto assets are not currently a risk to global financial stability." Therefore, a ban on cryptocurrencies should not be a priority theme of the summit. Participants simply have more important things to discuss and decide on. Of course, according to the FSB, this could change as cryptocurrencies continue to grow as fast as before and "become significantly more used or more closely intertwined with the core of the regulated financial system." To quickly raise the alarm when this happens the FSB "identifying metrics to improve the observation of the risks to financial stability posed by crypto assets." At present, however, the FSB sees no immediate need for action.
However, the institution recognizes that cryptocurrencies raise a lot of questions about consumer protection and that they are used to disguise illegal activities or to launder money. At the same time, it recognizes that the underlying technology "has the potential to improve both the efficiency and inclusion of the financial system and the economy."
The relevant national authorities would already be dealing with the topic. However, as the crypto markets are global, the FSB calls for greater international coordination and the participation of international organizations such as the Committee on Payments and Market Infrastructures, the Financial Task Force on Money Laundering or the International Organization of Securities Commissions. So it may well be that at the G20 summit, measures will be discussed and perhaps decided that will enhance international cooperation in the regulation of cryptocurrencies.
All in all, one could interpret this letter in such a way that FSB Chairman British Central Banker Mark Carney, while taking seriously the proposals of Member States such as France, Germany and Japan, sees no consensus for the adoption of radical rules.
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