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G20 summit to focus on regulation of crypto-currencies

G20 summit to focus on regulation of crypto-currencies

The G20 2022 Summit, the 17th meeting of the Group of 20, will take place on 15-16 November in Bali, Indonesia.

 

At the upcoming G20 summit, bringing together heads of state, finance ministers, and central bank governors from industrialized and emerging countries, crypto-currency will be one of the hot topics. Indeed, if the crypto-sphere is a promising market, it is however confronted with a major problem: the lack, or even total absence of regulation. Some crypto platforms thus easily escape sanctions as well as taxes.

 

According to Klaas Knot, Chairman of the Financial Stability Board (FSB), who is also a member of the Governing Council of the European Central Bank (ECB) and President of the Dutch Central Bank, the “crypto winter” (a sharp and sustained fall in crypto-currencies) has led the board to investigate the current structural vulnerabilities of the currency.

 

Instability

 

The total capitalisation of the sector, which in November 2021 had reached some 3 trillion dollars, has thus melted down to around 935 billion dollars at present. The FSB believes that this fall is not large enough to threaten financial stability but that rules are needed to regulate a likely recovery.

 

“Concerns about the risks to financial stability are therefore likely to return to the forefront soon,” writes Klaas Knot in a letter to the G20 finance ministers meeting in Washington in October.

 

The FSB thus recommends setting up a supervisory and risk and data management framework for cryptoasset firms. “Several cryptoasset firms have failed in the recent market rout due to liquidity vulnerabilities, undercapitalisation, concentrated exposures to risky entities and risky trading and commercial activities,” notes the FSB.

 

The proposals have been put out to public consultation until 15 December and are to be finalised in 2023.

 

Rules to be put in place

 

India, for its part, maintains a strict stance against crypto-currencies. And as the future host of the G20 summit (September 2023), it is likely to strongly defend its convictions in Bali. India’s Home Minister Amit Shah has even said that crypto-currencies are responsible for the increase in drug smuggling in India.

See Also

 

The Financial Action Task Force (FATF), an intergovernmental body that fights money laundering and terrorist financing, is set to step up its fight by committing to annual checks to ensure that countries are implementing anti-money laundering rules. Countries that fail to comply with these checks will be placed on a “grey list” and those that continue to fail to cooperate in the fight against money laundering will be placed on a “black list” and be subject to economic sanctions by the FATF.

 

 

Read also> Indonesia gets into crypto-currency

 

Featured photo : © Mast Irham/Pool via Reuters

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