Reaffirming that it does not threaten global financial stability, what promises G20 has made to the encryption industry

Reaffirming that it does not threaten global financial stability, what promises G20 has made to the encryption industry

At the end of the G20 summit in Osaka, Japan, the G20 leaders issued a statement containing crypto assets, reaffirming that crypto assets would not pose a threat to global financial stability, and that institutions that require regulatory standards continue Work in depth.

G20 Leaders Declaration

The G20 is the largest summit ever held in Japan and is now finally ending.

During the two-day event, leaders of the G20 and the invited guests of national and international organizations discussed a number of important topics, including the global economy, trade and investment, technological innovation, digitalization, and global finance. At the end of the summit, the leaders of the G20 jointly issued a statement containing content related to cryptocurrencies.

This statement is mentioned in the opening paragraph:

“Our G20 leaders met in Osaka, Japan from June 28 to 29, 2019 to work together to address major global economic challenges. We will work together to promote global economic growth while harnessing the power of technological innovation, especially It is digital technology innovation and its application that benefits everyone."

When talking about global financial issues, the G20 leaders said that technological innovation can bring huge benefits to the financial system and the wider economy. They elaborated in the statement:

“Although crypto assets are not currently a threat to global financial stability, we are keeping abreast of developments and are wary of existing and emerging risk issues.”

The statement of the G20 leaders is also a supplement to the joint statement of the G20 Finance Ministers and Central Bank Governors Meeting held in Fukuoka on June 8 and 9. National finance ministers and central bank governors specifically mentioned issues related to cryptographic assets related to consumer and investor protection, anti-money laundering (AML), and combating terrorist financing.

Requirements for the Global Financial Stability Board and other standards-setting bodies

The Global Financial Stability Board (FSB) is an international body that oversees the global financial system and makes recommendations. They submitted three reports at the G20 Finance Ministers and Central Bank Governors Meeting. The first report is the crypto assets regulator. The second report details the standards-based organization's regulatory approach and regulatory work on cryptographic assets; the third report focuses on analyzing the impact of decentralized financial technology on financial stability, regulation, and governance.

The leaders of the G20 said:

"We welcome the ongoing work of the Global Financial Stability Board and other standards-setting bodies and ask them to make recommendations on other multilateral responses as needed. The impact of the Financial Stability Board on decentralized financial technology and regulation We also welcome the work of the organization on how to engage with other stakeholders, and we will continue to strengthen our efforts to improve network resilience."

In fact, before the current G2 0 summit, Randal K. Quarles, president of the Global Financial Stability Council, gave a letter to the leaders of the G20 to outline their past year. Work progress, in which he wrote:

“ While we are curbing risk, we also need the benefits of financial innovation. It is the key to balancing risks and benefits as early as possible and in-depth understanding of how technological innovations change financial institutions and markets.”

If new types of cryptographic assets are used more widely for retail payment purposes, authorities need to pay close attention to ensuring that cryptographic assets are subject to high standards of regulation. Randall K. Quails concludes in his letter:

“The Global Financial Stability Board and other standards-setting bodies will closely monitor risks, while also strengthening coordination and considering other multilateral responses as needed.”

According to the Global Financial Stability Board, some members pointed out that the policy implications of crypto assets are not always suitable for existing transfer regulatory policies, which in turn leads to serious regulatory asymmetry and also involves investor and consumer protection issues. However, some members believe that most issues can be resolved through existing policy tools.

In summary, the Global Financial Stability Board recommends that G20 countries continue to review their own regulatory approaches and potential gaps, including whether more coordination is needed between them. In addition, the G20 finance ministers and central bank governors welcomed the progress of the Financial Stability Board's initiative, which they believe can effectively respond to and recover from some network events.

Encrypted assets do not constitute financial stability risks

According to a report submitted to the G20 by the Global Financial Stability Board last March, crypto assets do not pose a risk to global financial stability, but the situation may change if crypto assets are used more widely or in conjunction with the core financial system. In June this year, the Global Financial Stability Board updated its assessment of the impact of crypto assets on global financial stability. They pointed out:

“Through the ongoing assessment of the Global Financial Stability Board, so far, crypto assets do not pose a significant risk to global financial stability, but they do bring some deep policy issues beyond financial stability.”

The Global Financial Stability Board also stated that it is necessary to continuously assess the impact of cryptocurrencies on financial stability, especially as many new encryption products and services are under development. In addition, the Global Financial Stability Board will issue a report on the crypto assets of stable currency and token development in September this year.

Commitment to the Financial Action Task Force's regulatory guidelines

Another intergovernmental body that is actively working to develop standards for cryptographic assets is the Financial Action Task Force (FATF), which is primarily responsible for formulating policies in areas such as combating money laundering. On June 21st, the Financial Action Task Force released a new regulatory guide based on Virtual Asset and Virtual Asset Service Provider (VASP) risk solutions, but some industry participants raised concerns about implementing some of these recommendations.

For the work done by the Financial Action Task Force, the relevant statements of the G20 leaders are as follows:

“We reaffirm our commitment to apply the newly revised Financial Action Task Force standards to virtual assets, related anti-money laundering service providers, and combating terrorist financing. We welcome the explanatory notes and guidelines issued by the Financial Action Task Force. ""

Interestingly, as early as June 9th, the G20 finance ministers and central bank governors meeting, participants also expressed support for the Financial Action Task Force's cryptographic supervision guidelines, and reiterated their commitment to the recently revised financial The Action Task Force standards apply to virtual assets and related anti-money laundering and counter-terrorism financing providers.

Before the end of the G20 summit, the Financial Action Task Force released a report on June 27th to give G20 leaders an idea of ​​what they are doing. The G20 expressed its support for the Financial Action Task Force and hoped that the standards they developed would be implemented quickly and effectively on a global scale. The Financial Action Task Force added that:

“Technical innovation, including virtual assets like blockchain and other distributed ledger technologies, can bring significant benefits to the financial system and the wider economy.”

In addition, the G20 finance ministers and central bank governors also welcomed the work of the International Securities Commission on consumer and investor protection and market integrity in the crypto-equity trading platform.

Reaffirming that it does not threaten global financial stability, what promises G20 has made to the encryption industry

The global cryptocurrency industry hopes to be more united

In response to the recommendations of the Financial Action Task Force, national policy makers, government officials and representatives of some encryption companies discussed the challenges of implementing the relevant guidelines at the V20 Summit, which was also held on June 28 and 29 Held in Osaka.

After the meeting, a group of cryptocurrency trading associations representing virtual asset service providers (VASP) signed a Memorandum of Understanding (MOU) to establish an association that would provide a unified voice for the virtual asset industry on a global scale. The signatories include the Australian Digital Business Association (ADCA), the Singapore Cryptographic and Blockchain Industry Association (ACCESS), the Japan Blockchain Association (JBA), the Korean Blockchain Association (KBCA), and the Hong Kong Blockchain Association ( HKBA) and so on. (Star Daily)