In the Delhi Declaration, the G20 leaders aim to establish a strong regulatory framework for cryptocurrency. Even though each country has a unique approach to digital assets, the G20 Summit has fostered worldwide collaboration in regulating crypto assets.
What is Cryptocurrency and Why is it so Controversial?
Cryptocurrency refers to digital assets like Bitcoin, Ethereum, and others. It is an innovative and disruptive technology that challenges traditional financial systems and conventional currencies. Due to its high market value and transparency, it has gained significant attention. One of its key features is decentralization, which means that it is not controlled by a central bank.
The topic of cryptocurrency sparked intense debates among governments worldwide, with varying approaches ranging from strict regulation to complete prohibition. Opinions on the matter were mixed, but progress was made during the G20 Summit as leaders agreed to collaborate on the management of crypto assets.
G20 Leaders Declaration
The leaders of the G20 have officially supported the recommendations made by the Financial Stability Board (FSB) regarding the regulation of cryptocurrencies. Recently, the International Monetary Fund (IMF) and FSB released a joint paper which suggested that a comprehensive policy and regulatory approach would be more effective than an outright ban when dealing with the potential risks associated with crypto assets. The G20 Leaders Declaration in Delhi has now given its endorsement to the FSB’s recommendations, which aim to establish a coordinated and comprehensive policy and regulatory framework.
Banning cryptocurrency might appear an easy option, but it poses a bigger threat to financial stability. This move might push crypto assets outside of a nation’s area of scrutiny, which might lead to higher financial integrity risks. Thus, the FSB’s paper says that there is a need to implement the Financial Action Task Force anti-money laundering and counter-terrorist financing standards for cryptocurrencies and related service providers.
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So now, finance ministers and central bank governors of the G20 countries will meet in October to discuss the initial steps that were outlined in the IMF-FSB paper. The discussion will be held at their fourth meeting in Marrakech, Morocco, during the World Bank and IMF annual meetings that are set between October 9th to 15th. This is a step forward and is welcomed progress as well.
