The G20 meeting of finance chiefs takes a step forward towards crypto regulations

by Arthur · March 5, 2023

The meeting with G20 finance ministers and central bank governors (FMCBG) 24-25 February in Bengaluru, India concluded with a strong commitment to regulations for the cryptocurrency sector.

The International Monetary Fund (IMF), the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) have been tasked with coming up with recommendations and a roadmap for regulating the cryptocurrency sector.

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G20 meeting of finance chiefs

“We look forward to the IMF-FSB Synthesis Paper, which will support a coordinated and comprehensive policy approach to crypto-assets, by considering macroeconomic and regulatory perspectives, including the full range of risks posed by crypto-assets,” the G20 leaders’ summary and the outcome document said.

Besides the Finance Ministers and Central Bank Governors, the event was attended by Kristalina Georgieva, Managing Director, IMF, Agustin Carstens, General Manager, BIS, and representatives of the Financial Stability Board (FSB).

Klaas Knot, chairman of the FSB, sent a letter to the G20 meeting in which he mentioned that the FSB is preparing recommendations for the regulation of cryptocurrency and decentralized finance.

“This year, the FSB will finalize its recommendations for the regulation, oversight and supervision of cryptoassets and markets and its recommendations targeting global stablecoin arrangements, which have characteristics that could make threats to financial stability more acute,” the letter said. .

A seminar on Policy Perspectives: Debating the Road to Policy Consensus on Crypto Assets was also conducted on the sidelines of the two-day FMCBG event.

Ban and the Tough Talk

To hint at the mood of the meeting, IMF chief Kristalina Georgieva said during a Bloomberg interview, “In the world of private equity, there needs to be more regulation… We are very positive about regulating the world of digital money. ” And that is a top priority!

She clarified that stablecoins that are fully backed by reserves create a “reasonably good space for the economy.”

Cryptocurrencies that are not supported cannot be legal tender. And if they pose a threat to financial stability, they can also be banned. But regulations, predictability and appropriate measures for consumer protection should be sufficient to avert any risk to financial stability, she clarified.

Need and call for regulations

Within a year, leading crypto firms such as Terraform Labs and FTX collapsed due to a lack of regulation and oversight, resulting in the loss of billions of dollars of investors’ money. This has prompted authorities and regulators to seek greater regulation and monitoring rights over crypto businesses.

The just concluded G20 meeting of finance chiefs has agreed to consider recommendations from the IMF and FSB in their subsequent meetings. For the cryptocurrency sector, it bodes well that following the EU’s MiCA regulations, the G20 is proceeding with regulatory plans.