By Staff Writer
G20 finance chiefs and central bankers, who will meet in Japanese city of Fukuoka this week from June 8 to June 9, are likely to agree on a new international regulatory framework for crypto exchanges with the eye on curbing money laundering, reports Nikkei.
It has long been expected that Japan, as a host of the global summit and as a crypto pioneer, will likely push for a set of unified principles under the aegis of G20, as BAR has written earlier (See here here).
But the challenge is in how to go about regulating the exchanges. It now appears that the first step would entail pushing for the creation of a registry for crypto exchanges as Japan had done in April 2017 following the hacking incident at a crypto exchange Coincheck.
The Financial Stability Board, an international body of financial regulators, published a directory of cryptocurrency regulators in April, which will be submitted to the G20.
The main body in charge of pushing for anti-money laundering regulations on virtual assets, which bypass the traditional banking channels, is the Financial Action Task Force (FATF), which has the full backing of the G20.
Crypto assets earned a mention in the declaration issued by the G20 leaders following their meeting in Buenos Aires, Argentina in December last year (see here).
Besides regulating crypto assets, such as Bitcoin and Ether, for financial crime risks, it will consider “other responses as needed,” the G20 then said.
The FATF has issued a guidance for AML/CFT with regards to virtual currencies on June 2014 (see here), with further amendments to the original guideline released on October 2018 (see here.)
It has been reported that the global financial crime watchdog is expected to release more details on how AML/CFT norms can be applied crypto assets by the middle of 2019 (see here.)
Some media channels have also reported earlier that Paris-based watchdog is on the verge of adopting rules that would require crypto exchanges to pass customer information to each other when transferring funds, just as banks are required to do (see here).
This has made crypto operators quite nervous, triggering a major lobbying effort aimed at asking the FATF to reconsider or delay the proposed standard.
But the regulators “appeared set on finalizing the standard with at most minor tweaks,” CoinDesk reported, quoting four unnamed people who attended the FATF’s consultative meeting held in Vienna on May 6-7.
While the FATF recommendations are not legally-binding international law, its rules have significant power because the FATF’s members include 36 economies and two regional bodies that are some of the largest and most important financial systems in the world.
All eyes are now on the outcome of the G20 meetings and their announcements will likely frame the debate on the tricky but hot subject of regulating digital assets.
