The way forward on crypto regulations
Published on February 12, 2023 19:45 IST
Finance Minister Nirmala Sitharaman indicated that there will be a need for some sort of standard operating procedure
Crypto originated as a tool for transactions, but as demand skyrocketed, people have seen it as an asset to chase high returns with. (iStock)
The finance ministers and heads of central banks in the G20 countries gathered this weekend for a crucial meeting that could lay the foundation for future crypto regulations. Dealing with cryptocurrencies like Bitcoin and Ethereum and a host of lesser-known, and often uncertain, ones like Dogecoin has been a difficult challenge in recent years. The challenge has become especially urgent since billions, if not trillions, of dollars have been poured into them by people over the past three years. Finance Minister Nirmala Sitharaman indicated ahead of the meeting that on the agenda will be the need for some sort of standard operating procedure, which all participants must be on board with.
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Crypto originated as a tool for transactions, but as demand skyrocketed, people have seen it as an asset to chase high returns with. Its borderless nature and its size today not only pose a threat to citizens’ financial health – the volatility seen in recent years has wiped out billions in individual savings – but it can also allow large capital flows that bypass security controls. Smugglers have used it for money laundering, terrorists for financing, and rogue nations to keep their financial inflows going even when they are sanctioned by much of the world. Indeed, the interconnectedness of the global financial system means that crypto regulation will need all countries to have a consistent standard of protocols and guidelines. If the world wants to reduce the harms of crypto, a pact within the G20 – which accounts for 85% of the world’s GDP – will be essential to ensure that crypto plays by the rules of the road that will be defined for it.
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The finance ministers and heads of central banks in the G20 countries gathered this weekend for a crucial meeting that could lay the foundation for future crypto regulations. Dealing with cryptocurrencies like Bitcoin and Ethereum and a host of lesser-known, and often uncertain, ones like Dogecoin has been a difficult challenge in recent years. The challenge has become especially urgent since billions, if not trillions, of dollars have been poured into them by people over the past three years. Finance Minister Nirmala Sitharaman indicated ahead of the meeting that on the agenda will be the need for some sort of standard operating procedure, which all participants must be on board with.
Crypto originated as a tool for transactions, but as demand skyrocketed, people have seen it as an asset to chase high returns with. Its borderless nature and its size today not only pose a threat to citizens’ financial health – the volatility seen in recent years has wiped out billions in individual savings – but it can also allow large capital flows that bypass security controls. Smugglers have used it for money laundering, terrorists for financing, and rogue nations to keep their financial inflows going even when they are sanctioned by much of the world. Indeed, the interconnectedness of the global financial system means that crypto regulation will need all countries to have a consistent standard of protocols and guidelines. If the world wants to reduce the harms of crypto, a pact within the G20 – which accounts for 85% of the world’s GDP – will be essential to ensure that crypto plays by the rules of the road that will be defined for it.
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