G20 member countries held a summit devoted to digital assets. Currently, they are looking at an October deadline for reviewing a global anti-money laundering (AML) standard on cryptocurrency.
Last week, member countries of Group of Twenty (G20), an international forum for the governments and central bank governors, held a summit, where heads of state and global financial leader paid special attention to digital currencies. As a result, they issued a statement which confirmed their position on vigilant monitoring over cryptocurrency.
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An agreement to keep monitoring the crypto sphere and to develop proposals of cryptocurrency regulations was reached in March, when G20 members decided to prepare crypto regulation recommendations by July of this year. The countries also called on the Financial Action Task Force (FATF), an international institution aimed at fighting money laundering and terrorist financing, to define in three months crypto regulation and clarify how its existing AML standards can apply to cryptocurrency.
According to the communique, technology and cryptocurrency can provide promising opportunities for growth and innovation. However, risks for instability take place as well. The G20 countries said:
“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 a global financial stability risk, we remain vigilant.”
One more international coalition which seeks to foster economic development and stability is the Financial Stability Board (FSB). Before the G20 summit, FSB published a report on crypto-assets, including cryptocurrency and blockchain based securities, and said it had developed a framework, in collaboration with Committee on Payments and Market Infrastructures (CPMI). The report detailed the risks of various scams and market manipulation, and set out the metrics that the FSB would use to monitor crypto-asset markets in order to spot any financial stability risks early enough to take action.
The report states:
“New innovations that might add to efficiencies at the cost of safety represent an important challenge for central banks. Currently, ‘first generation’ private digital tokens (which include so-called ‘cryptocurrencies’ and crypto-assets) that are totally decentralised and do not represent a claim or underlying asset, make for unsafe money. Safer central bank issued cash may be less convenient in an era of electronic payments, and the use of cash is declining in some jurisdictions. At the same time, central banks are reviewing how to improve and modernise existing central bank operated payment systems. Central banks can encourage and catalyse improvements to current arrangements, as has happened recently in the field of faster payments. However, responding directly to the challenge with a central bank digital currency (CBDC) would be an entry into uncharted territory.”
The metrics presented by FSB are the response to the G20’s request in March. By October of this year, anti-money laundering (AML) standard on cryptocurrency is expected to be reviewed.