G20 Regulations For The Crypto Space Could Unleash Real Blockchain Change
In the G20 meeting that occurred in March 2018, the central bankers and finance ministers of the G20 countries reunited in Buenos Aires to discuss international trade and other important topics. Among them was the regulation of the crypto space, a topic that has been controversial but will certainly change the future of the cryptocurrency market.
Since the meeting, the G20 members have begun to study ways to make the crypto markets less risky for the investors and to craft a regulation that will help the blockchain technology to become more mainstream and offer its benefits to people.
Many investors still fear that compliance with the government may harm the future of the market, but that could not be farther from the truth, as institutional investors, which have a great capability and the resources to make this market really flourish, are the key to making this particular market grow.
Will The Next Summit In Late November Discuss Crypto?
The next meeting of the G20 is already marked. It will be made in Argentina again and either the action or inaction of the G20 will affect the market. According to the Governor of the Bank of England and Chair of the G20’s Financial Stability Board, Mark Carney, the technology has the potential to improve economics and to make the financial system more inclusive.
Because of this, there is a good chance that the G20 might address some crypto legislation when it happens in November. However, it is still too early to tell for sure whether this legislation will be beneficial for cryptocurrencies or if it will sanction some of them as a way to address issues.
While different nations are taking different stances on how to deal with crypto, some are more positive than others. India’s, for instance, is very against cryptos, while Malta’s is very straightforward and supportive.
It seems like we are still years away from a regulatory setup that can be really comprehensive, so what the G20 can do right now is to mediate and work on the definition of cryptocurrency. Many countries have different agencies and rules about this and the situation is very chaotic as it stands right now. A definition from the G20 could go a long way in helping it to become more stable.
The main issue is whether tokens are securities, utilities or both. Are they real cash or a financial asset like stocks? Not all tokens are the same so that only adds to the main problem. While clarity on this front will not be any easy to get, it will be important moving forward, as it will allow entrepreneurs and investors to navigate the waters of the market better.
Another important point is that the information required to regulate the industry might not even exist at this point and the creation of sandboxes like the UK government is doing can be a good way to achieve interesting results on a long-term scenario.
Other points can be considered relevant and one of them is taxes. As AML and KYC procedures become more common in the market, rules for taxes will have to change to accommodate the way that cryptocurrencies work.
While it would be too optimistic to believe that all these issues will be solved by the G20, a regulatory framework that would encompass most of them can be beneficial for the industry. Increased regulation will remove the uncertainty of the market and enable more cooperation between governments and companies to broaden the market.
At the moment, numerous companies have already started to explore the blockchain technology, but in some cases, like in the United States, these companies do not have a framework to work with and this means that they may face issues for not knowing the future of their businesses. A good example is Ripple, which is considered a security by the SEC, may lose most of its value.
About The G20
The G20 forum was initially created for finance ministers and central bank governors after the Asian debt crisis hit the world in 1997. Since then, the institution has been important for the financial world.
The Financial Stability Board was created after the Great Recession to coordinate and prevent financial instability in the world. It has been important to enhance how banks work via the Basel Accords since then.
For being an international institution, the G20, along with the FSB, has a good shot for creating and enforcing a global regulatory framework for cryptos. It has relevant stakeholders and decision makers amongst its members, can craft transnational regulation and is already studying the impact of cryptocurrencies in the world of finances.
While any regulatory framework will definitely need governments to actually be implemented, these organizations have the authority to at least have a shot at it, while almost no one else can. Because of this, it would not be an exaggeration to say that the G20 may be one of the best positioned institutions in the world to spearhead the cryptocurrency and blockchain market regulation worldwide.