G20 Finance Ministers & Central Bank Governors Meeting, that was held over the weekend of July 22, 2018, in Argentina, have echoed the suggestion of its Financial Stability Board that while crypto-assets do not at this point pose a global financial stability risk, the global body still remains vigilant. The same was communicated in the official communique of the meeting which met to discuss “the future of work, infrastructure for development, and a sustainable food future”.
G20 comments important for crypto assets
G20 comments on crypto stand important as the forum is a platform financial and economic cooperation and is represented by countries whose members represent 85% of the world’s economic output, two-thirds of its population, and 75% of its international trade. As most of the member nations are still contemplating the regulations and dynamics of crypto assets, a decision on G20 forum could leave a roadmap for the member nations and others to follow.
While concluding that crypto assets lacked key attributes of sovereign currencies, they do not pose a risk to the global financial stability but wants to remain vigilant. The forum also said that it would look forward to FSB’s work to monitor the potential risk of crypto assets. It also reiterated its March comments of implementing Financial Action Task Force (FATF) standards to crypto assets and also asked FATF to clarify how its standards apply to crypto assets. The official statement from the communique was as follows,
“Technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy. 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.
While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant.
We welcome updates provided by the FSB and the SSBs and look forward to their further work to monitor the potential risks of crypto-assets, and to assess multilateral responses as needed. We reiterate our March commitments related to the implementation of the FATF standards and we ask the FATF to clarify in October 2018 how its standards apply to crypto-assets.”
FATF’s role important as global regulators vigilant and caution towards crypto assets
In June 2018, sources Japanese government the Financial Action Task Force (FATF) is contemplating “binding rules” for cryptocurrency exchanges. This would mark a step toward stricter regulation of the platforms, which have been guided by FATF’s June 2015 standards.
In its plenary meeting held in between 27-29 June 2018 in Paris, FATF said that they are actively monitoring and understanding how criminals and terrorists can use virtual currencies/crypto assets to launder the proceeds of crime or move funds to support terror.
The FATF agreed to initiate a project on investigative best practices related to virtual currencies/crypto-assets to assist law enforcement in the light of the growing risks. FATF’s has also begun its review of guidance and standards to determine if changes are necessary to clarify their application to virtual currencies/crypto-assets and promote a more consistent regulatory approach, taking into account the results of FATF’s stocktake exercise of the different national regulatory approaches.
The FATF also plans to hold an intersessional meeting in September on how the FATF Standards apply to virtual currencies/crypto-assets.
As FATF prepares to for its September meeting on how the FATF Standards apply to virtual currencies/crypto-assets, its outcome becomes more crucial as G20 too would be looking for it in October. It would be interesting to how FATF applies its standards to crypto assets and its conclusions, as that could become a roadmap for the countries around the globe to lay their regulations around.
Will FATF be able to positively implements its standards to crypto assets? Do let us know your views on the same.