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G20 Focuses On Global Regulators to Consider Multilateral Response to Crypto

G20 Ministerial meeting on Trade and Digital Economy held in Japanese city of Fukuoka, Japan, from 8 June 2019 – 9 June 2019. G20 or (group of twenty) is an international forum for the government and central banks governors from 19 countries and the European Union. Its aim is to discuss policy pertaining to the promotion of international financial stability.

FSB and Global Standard-Setting Organisation Were Asked To Monitor Risk around Crypto Assets

G20 finance ministers and central bank governors have asked the Financial Stability Board (FSB) and global standard-setting organizations to monitor risks around crypto assets. The request was made in a joint communiqué published on the website of Japan’s Ministry of Finance on June 9, following the G20 meeting held in Fukuoka, Japan.

Financial stability Board (FSB) is an International body that monitors and makes recommendations about the global financial system. It promotes international financial stability, It does so by coordinating national financial authorities and international standard, setting bodies as they work towards developing strong regulatory supervisory and other financial sector policies.

“Regulators need to step up risk assessment of the cryptocurrency sector as current rules are patchy, and quick technological changes may lead to gaps in policies on digital money” said the global financial stability watchdog.

“They should work to foresee risk in the emerging industry that could impact financial stability” The Financial Stability Board (FSB) said on Friday (May 31) in a report for G20 finance ministries and central bank governors.

The leaders that consigned the document state that they urge relevant institutions to give greater consideration to crypto assets and consider appropriate action:

“We ask the FSB and standard setting bodies to monitor risks and consider work on additional multilateral responses as needed.”

The joint statement also points out that “technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.” This exact sentence was also included in the document released after the G20 summit held in July last year in Buenos Aires. After expressing such optimism, the authors of the paper also raised concerns over those technologies:

“While crypto assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”

The latest statement notes that the involved parties look forward to the adoption of the Financial Action Task Force’s (FATF) Interpretive Note and guidance on crypto assets “at its (FATF’s) plenary later this month. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. It is an Inter-governmental body established in 1989 by the ministers of its member jurisdictions.

Chainalysis Response to Regulating Crypto

As Cointelegraph reported yesterday, blockchain analysis firm Chainalysis, which has engaged directly with global regulators, noted that “it would be surprising if the involved parties agree on something new during the G20 summit this year”. 

Chainalysis is a high-profile blockchain intelligence firm which provides various technologies that help organizations monitor the flow of cryptocurrencies on multiple blockchains and track any transaction suspected to be in connection with terrorist financing and money laundering efforts. 

In April, Japanese media reported that during the meeting of central bank governors and finance ministers in Fukuoka, leaders were expected to establish new AML regulations.
The unevenness of the cryptocurrency landscape has prompted efforts by governments to develop a global regulatory framework. The FATF answered this call and will release a set of international AML standards in June 2019.

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