G20: Cryptocurrency recommendations from members due in July
G20 members aim for cryptocurrency clarity in July, but complications remain.
The G20 meeting of finance ministers representing the world's largest economies has agreed that cryptocurrencies need to be examined further, and that more information is needed before a global regulatory framework can be effectively constructed.
In a public statement the organisation re-committed themselves to the investigation of cryptocurrencies, and Financial Action Task Force (FATF) recommendations on how to best pursue global implementation of regulatory standards for preventing money laundering and terrorism financing with cryptocurrencies.
"We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly. Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing. Crypto-assets lack the key attributes of sovereign currencies. At some point they could have financial stability implications."
"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 standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed."
Where it stands now
July is now the agreed deadline for member nations to submit recommendations on the information needed to begin crafting a regulatory response to cryptocurrencies.
"In July we have to offer very concrete, very specific recommendations on, not 'what do we regulate?' but 'what is the data we need?'" said Argentina Central Bank chair Frederico Sturznegger at the press conference following the Tuesday meetings.
"Policy responses, including international cooperation, are needed to harness the opportunities and ensure the benefits are shared by all. We therefore agree to develop a menu of policy options for consideration at our meeting in July," the G20 statement reads.
Essentially, all the finance ministers will go back to their own countries to work out how they feel about cryptocurrencies and what kind of information they want to help them craft regulations. In July they'll get together again to discuss their findings, lay it all out and ideally start hammering all that information into some kind of global regulatory framework.
Not all member countries are on board, and may not necessarily choose to adopt the G20 cryptocurrency proposals. Each of them also has their own priorities around cryptocurrencies.
For example, Ilan Goldfajn, president of Brazil's central bank stated that Brazil wouldn't be regulating cryptocurrencies, reports Cronista, and may have already decided to wash its hands of impending regulations.
Meanwhile, Mark Carney of the UK has argued that it's not really a risk to global financial stability; US Treasury secretary Steve Mnuchin emphasised that at this stage the US sees its primary focus to be preventing illegal activities through cryptocurrency; while other countries are more concerned with protecting consumers from the potential investment risks.
Meanwhile, Russia might be a special case. It has already heavily committed to putting cryptocurrencies near the centre of ongoing economic policy, and was recently found to have been heavily involved in the creation of Venezuela's Petro cryptocurrency and examining it as a tool for escaping international sanctions.
Cryptocurrency itself might also be a special case. Even with complete buy-in from all member nations, it's still extremely difficult, if not entirely impossible, to effectively regulate cryptocurrency movement. As those who have tried to lay down the law on decentralised cryptocurrencies have noted, you can pass laws and make legal orders but there's simply no authority to receive them.
The technology itself can certainly benefit from more comprehensive regulation, but despite the concrete timeline and plan of action that's emerged from the G20 meeting, it's still not clear how all of this is actually going to work.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC, NANO