Blockchain Progress News & Updates

G20 agrees on Regulating Cryptocurrencies

The #G20, an international forum for the #governments and central bank governors from the world’s 20 largest #economies, has decided to regulate the crypto sector.

A #declaration released by the forum read:

“We will regulate #crypto-assets for anti-money laundering and #countering the financing of terrorism in line with FATF #standards and we will consider other #responses as needed.”

What #Impact Could it Have?

Over-regulation restricts the #growth of emerging asset classes and #technologies by limiting the way companies can grow over the long-run.

For many years, the #G20 has maintained an open-minded stance towards #cryptocurrency regulation, possibly due to the encouragement of #Japan, the second largest cryptocurrency market behind the U.S., to regulate the #space and provide a healthy #ecosystem for both startups and established companies.

Regulators can #facilitate the growth of cryptocurrency companies, especially #exchanges that require fiat on-ramps, by providing seamless access to #legacy systems and banking services.

The government of South Korea, for example, recently permitted #banks to work with cryptocurrency exchanges and provided a green light for financial #institutions to offer virtual bank accounts to digital asset #trading platforms.

Most #countries within the G20 have already regulated their respective #cryptocurrency sectors. An effort to regulate the international #cryptocurrency market could encourage countries like #Russia, #Argentina, and #India that are still yet to establish clear regulatory #frameworks around the asset class.

The G20 said that it intends to help #crypto create an open and resilient #financial system and emphasized that it is “crucial to support sustainable #growth.”

While over-regulation can hurt #businesses in an early phase of growth, if countries within the #G20 ensure that the policies they implement will not negatively affect the #growth of cryptocurrency-related businesses to a significant extent, then the G20’s decision to regulate the #global market could help eliminate the barrier between crypto and the traditional finance #sector.

“We will continue to monitor and, if necessary, tackle emerging #risks and vulnerabilities in the #financial system; and, through continued regulatory and supervisory #cooperation, address #fragmentation. We look forward to continued progress on achieving resilient non-bank financial #intermediation.”

More #regulatory clarity could also speed up the process of major financial institutions like Morgan Stanley, Goldman Sachs, and State Street in establishing #cryptocurrency #ventures, which are currently waiting for #regulators to operate as trusted custodians.

Public #Investment Vehicles

Last week, the U.S. Securities and Exchange Commission (SEC) #chairman Jay #Clayton stated that Bitcoin markets are generally #unregulated and vulnerable to #manipulation.

Chairman Jay Clayton said:

“What #investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the #risk of manipulation. It’s an issue that needs to be #addressed before I would be comfortable.”

A gradual process of regulating the global #cryptocurrency #market may lead exchanges to become increasingly compliant with regional #regulations, opening up the possibility of public #investment vehicles like an exchange-traded fund (ETF) to be launched on top of the public #cryptocurrency exchange market.

Read the full G20 declaration below:

Buenos Aires Leaders Declaration

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