The final weeks of the last year saw the price of Bitcoin and other altcoins climbing to their life-time peaks. The Finance Minister of France had also suggested that a public debate should be held on Bitcoin at the G20 summit in Argentina which just concluded. However, the summit took note of how different nations are positioned with regard to cryptocurrencies and set a firm deadline of July 2018 to bring forward recommendations to regulate cryptocurrencies across the globe. The summit also noted that there was some general interest and uptake in approaching this confusing and unknown space and so far countries have been moving forward with their own regulations.
But, once the conference got under way, the buck slowed down with the FSB or Financial Stability Board that coordinates financial regulation within the G20 economies resisted calls given by some of the members to discuss cryptocurrencies regulation at the present conference. Instead, many member states with some notable exceptions came to the decision that cryptocurrencies need further examination and that before proposing any regulation, more information was necessary. Thus, the summit initiated first steps with the G20 nations bringing forward their respective information and data to start the recommendations process on ways to regulate cryptocurrencies on a global scale.
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The announcement was made by Federico Sturzenegger, the chairperson of Argentina Central Bank who stated that in July the members have to offer very specific and very concrete recommendations on not what should be regulated but what data was needed. Essentially, this statement indicates that at least there is an agreement from some of the members, if not all, that there was a need to collate adequate tangible information and data so that discussions can be started when G20 meets again in July for the next measures towards regulation. Thus, what has been achieved at the Argentina conference is at best baby steps but can be reckoned as directional and demonstrating that economic powers around the globe are taking a more serious view of cryptocurrencies.
Ilan Goldfajn, president of Brazil’s Central Bank stated that cryptocurrencies will not come under regulation in his nation. He added further that he will not be necessarily following the recommendations of G20.
The G20 however pretty much agreed on that the FATF or Financial Action Task Force which is an intergovernmental body created to fight terrorist financing and money laundering would apply its standards to cryptocurrency markets in respective countries. The G20 also stated that it is committed to implement the standards laid down by the FATF to crypto assets and looked forward to FATF reviewing those standards while calling on the FATF to advance implementation on a global scale. The conference also called on SSBs or standard setting bodies internationally to continue monitoring crypto assets and risks associated with it according to the mandates of the respective bodies and assess multilateral response as necessary. The same draft statement threw more insight into the manner in which these financial powerhouses viewed cryptocurrencies. In general, the G20 acknowledged that innovation in technology including that driving crypto assets holds the potential to enhance the inclusiveness and efficiency of the economy and financial system more broadly. The caveat however was that the Crypto assets do have issues with regard to investor and consumer protection, tax evasion, market integrity, terrorist financing and money laundering.
Focusing on the old rules and not making new ones
Some of the member countries like Germany and France were hoping that Bitcoin would occupy an important part of the conversations at the G20 summit and perhaps that regulations could start getting formalized. However, the FSB decided against embarking on launching a global regulation for cryptocurrencies at the present conference because of its intention to shore up some of the economic rules that are in force.
The FSB was also of the view that at the present time, cryptocurrencies do not pose any risks to the stability of global finances.
The crypto markets were somewhat relieved by the views expressed at the G20 summit and a moderate break-out from the recent slump was seen across a basket of digital currencies with bitcoin in the lead managing to edge up to $9,000 and manage to stay in that territory.
What can be expected in July?
At this juncture, global summits need to look deeper into where each of the G20 nations stand on cryptocurrency regulation in their land. Some of the nations have already expressed their stand and you can view the details here. Notice the split opinions over the spectrum – embracing, positive, banning and negative. Brazil, for instance, is already on record that it will necessarily follow the path G20 eventually lays down with regard to a global regulation and others too can be expected to follow depending on their take so far on the subject.