G20 Presses on Regulations to Prevent Cryptocurrency Use for Money Laundering
In a bid to address the growing concerns over the misuse of cryptocurrency, Japan has urged its G20 counterparts to step up efforts to prevent cryptocurrencies from being used for money laundering. According to the Reuters, the Japanese government, which had decided to take up the matter in the G20 finance leaders’ meetup last month, was able to get some national leaders onboard.
As a result, the summit has asked FSB and other SSBs (like CPMI and FATF) to report in July 2018 on their work on crypto-assets. Earlier, Japanese officials were concerned about the outcome as the prospects of leaders’ agreement on specific regulations were unlikely. Since every country has its own domestic regulations and interests, the possibility of having a shared set of regulations is still dim.
An official commented: “The general feeling among the G20 members was that applying too stringent regulations won’t be good. Therefore, most of the discussions had focused on anti-money laundering steps and consumer protection”.
The finance ministers and central bankers of the G-20 (Group of 20 major economies) met in Buenos Aires on March 19-20 – and among other things, cryptocurrencies, regulations, and money laundering were on its agenda. The main message of the meetup was: We will not ban, but regulate the market. A piece of very positive news was that there were many doubts about how the group including China, US, Japan, among others, would address the issue.
Here’s the summary of crypto-related key points, discussed during theG20 summit.
• Cryptocurrency and Blockchain should not only be adopted, but encouraged by the countries as they have the power to solve many of the financial woes of modern economies.
• G20 members agreed on the importance of the digital currencies and their ability to revolutionize the economy and social organization, therefore, they should not be banned. However, regulations are very important!
• The meetup also made it clear that the regulatory process will be handled in a careful manner. Hence, the market shouldn’t take it as a step to discourage development of innovative products and digital assets.
• The regulatory proposal remains (mainly) focused on preventing all illicit activities (like money laundering) and ensuring consumer protection from frauds and illegal ICOs and token sales.
While there is broader consensus on the issue (of money laundering) in general, Japanese fear that some countries have loose regulations, which create a room for money laundering.
It is pertinent to note that Japan was the first country to implement a formal oversight network that continuously monitors cryptocurrency trading. It regularly carries out detailed checks on cryptocurrency exchanges, a practice made compulsory after the hacking of Coincheck, when hackers stole $530 million from the exchange. Early in February this year, hackers breached into the money storage of this Tokyo-based cryptocurrency exchange.
With the extensive discussion on the subject, we hope that the industry will get some regulatory and administrative support – vital for growth and consumer protection.
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