Guest Author – Marequitta
Unregulated cryptocurrency has become a pressing matter for big corporations, major banking and financial institutions and now even the heads of state of the G20 Economic Summit. Back in February the finance ministers of the G20 met in Buenos Aires, Argentina to discuss trade and commerce between the countries with economic treaties. Among the topics discussed was the unified regulation of cryptocurrency which they’ve even set a July deadline for the initial draft of what could be a worldwide legislation on regulating all forms of cryptocurrencies.
According to Frederico Sturzenegger, Chairman of the Central Bank of Argentina, during the meeting most of the economic ministers that represented each member nation agreed that they need to thoroughly assess cryptocurrencies. However, before any regulations are imposed they must first gather more information regarding the matter. Although the July deadline is expected to have very specific recommendations it will be focused on the kind of data they’ll need and not about what parts of cryptocurrencies (i.e. processes or asset transfers) they’ll need to regulate.
Brazil, a member of G20, does not agree with the idea of regulating cryptocurrencies as it has already created its own cryptocurrency and is actively using it. Brazil Central Bank president Ilan Goldfajn said, in an interview with El Cronista, that Brazil unanimously disagrees with G20s plan on regulating cryptocurrencies. At the moment Brazil is using Ethereum blockchain to turn their age-old Popular Petition voting system into a cash machine, so it’s clear why the country isn’t happy with the idea of regulating crypto-assets. Furthermore, according to El Cronista, although Brazil might eventually accept G20s recommendations it will ultimately amend the laws suggested by the G20 in order to fit its own standards.
The G20 also stated that they might use the Financial Action Task Force (FATF) standards when dealing with crypto-assets in order to fight money laundering and terrorist financing, as there have already been instances where individuals used cryptocurrencies to help finance ISIS – a notorious terrorist organization operating in Syria and Iraq.
France, Germany, the U.S. and Japan were major sponsors of the discussions to curtail crypto-assets.
Both central banks and government officials have asked their respective governments as well as the G20 to probe how cryptocurrencies are used for criminal activities, their impact on investors as well as the global economy. On the other hand, France and Germany’s economic officials have expressed their concerns that investors might haphazardly jump into the cryptocurrency bandwagon and lose millions worth of investments due to the unpredictability of such digital assets. On top of this, the latest call to regulate crypto-assets came from Steven Mnuchin, who is the current US Treasury Secretary and a Japanese government official who asked to remained anonymous fear that there may be instances where cryptocurrencies are being used for illegal activities.
But the findings show the opposite of what the economic ministers of G20 are saying and even major regulators agree on this fact about cryptocurrency’s impact on the global financial system. Mark Carney, CEO of the Bank of England, who also happens to be the chairman of the Financial Stability Board of G20 has said that crypto-assets does not pose any threat to the global financial stability.
The real numbers indicates that crypto-assets make up on 1% of the total global gross domestic product (GDP), meanwhile the value of credit default swaps matches that of the 2008 GPD!
However, the G20 did published a document to the public stating that there is a potential that they’re considering for crypto-assets to be included in the current financial system. But they are concerned that users could easily slip through the regulations (if it will be implemented) and avoid paying their taxes or worse, use it for illegal activities.
An unknown G20 source indicated that there may be a second meeting within the week of the G20 Summit to resume discussions on cryptocurrencies.