By Staff Writer
G20 leaders have reaffirmed their commitment to a globally harmonized framework governing crypto assets, particularly with regards to fighting money laundering and terrorist financing during their meeting in Fukuoka, Japan this past weekend.
They were attending the G20 Finance Summit ahead of the Leaders’ Summit in Late June.
On the surface, there was no major surprise or a shift of tone for the cryptocurrency markets based on a 14-point communique issued by Japan’s Ministry of Finance on Sunday.
The document repeated the usual rhetoric of how crypto assets could bring “significant benefits to the financial system and the broader economy.”
While they do not pose a threat to global financial stability at this point, digital assets, it said, warrant continued monitoring of the potential risks they could pose. These relate to such areas as consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT) and cyber-security.
However, global finance ministers and central bankers said they back the implementation of the new standards governing virtual assets to be issued by the global anti-money laundering watchdog, the Paris-based Financial Action Task Force (FATF).
They said they look forward to the adoption of the FATF’s Interpretive Note and Guidance by the Paris-based FATF at its plenary later this month.
Some media channels such as Coindesk (see here) have said that those new as-yet-finalized FATF regulations are likely to be quite onerous and perhaps even difficult to comply because they would likely require exchanges to collect and share information about where and to whom they are sending money.
But others are less alarmist. They believe the FATF guideline on virtual assets is likely to more or less mirror the draft guidance issued in February (see here.)
IOSCO
In the communique, the global finance heads also welcomed the work done by the International Organization of Securities Commissions (IOSCO) on crypto-asset trading platforms related to consumer and investor protection and market integrity.
FSB
Among other global measures aimed at crypto assets, the Basel-based Financial Stability Board (FSB) is creating a directory of crypto-asset regulators, as previously reported (see here).
“We welcome the FSB’s directory of crypto-asset regulators, and its report on work underway, regulatory approaches and potential gaps relating to crypto-assets,” the communique said.
Cyber-security is a hot-button issue given the growing incident of hackings at crypto exchanges.
Not surprisingly, the global finance ministers said: “We also continue to step up efforts to enhance cyber resilience, and welcome progress on the FSB’s initiative to identify effective practices for response to and recovery from cyber incidents.”
On the whole, global finance czars have thrown their support behind various international and multilateral initiatives aimed at establishing oversight on the nascent crypto asset industry.
At the end of the day, the mandate of rule-making and implementation ultimately lies on regulators in individual national jurisdictions. But it is quite clear from the document that G20 and the global finance chiefs do not want to be seen as coming down too strongly on crypto assets, lest it might backfire for giving undue attention, and perhaps legitimacy, to the innovative and albeit volatile asset class
