The G20 has confirmed that cryptocurrency regulations are to be implemented, as published in a Leaders’ Declaration on 1 December. The declaration also closes by thanking Bank of England governor Mark Carney for his work as chair of the Financial Stability Board (FSB).
Safety first
The meetings were held in Buenos Aires, Argentina, on 30 November and 4 December 2018. Here, the members have brought the topic of crypto-assets to the table and have firmly stated in the declaration that they “will regulate crypto-assets for anti-money laundering” purposes, as well as counter the funding of terrorism “in line with FATF standards”, with other considerations open to suggestion.
This brings a close to his ongoing relationship with cryptocurrencies and blockchain technology, one that has been extraordinarily formative for the nascent industry as well as the G20, to whom he has provided guidance and counsel to on the matter. Nevertheless, his work has laid the foundations from which positive leaning regulations can be formalized.
The Carney effect
The acknowledgment in the declaration to the Bank of England bears significance as Carney steps down from his role as of late November.
In February, the governor espoused cynical views on the success of cryptos and their broader applications; though over time, he has become a rational component of the discourse, discussing the potential of central bank digital currencies (CBDCs), and also soothing the concerns of institutions and governments, saying that digital currencies bore “no risk” to the global financial system.
Carney’s ongoing influence on the development and creation of regulations for crypto-assets for the G20 will be one to follow closely. Previously, the G20 called upon the FSB to produce a report on its crypto-asset work, which it did in July and in doing so, claimed to have developed a method to monitor the “financial stability implications of crypto-assets”.
In a letter written to G20 leaders around the time he was parting ways with the FSB, Carney reflected on the study that found “no significant risks”, though he goes on to acknowledge the growth of risk should cryptocurrency usage become more wide-spread or “linkages to the rest of the financial system grew”. He also comments on the serious issues that the crypto-assets such as “consumer and investor protection, money laundering, and terrorist financing”.
Forward thinking
Within the G20’s declaration titled ‘Building consensus for fair and sustainable development’, non-bank financial institutions are given a positive nod in a statement that eludes a typically balanced approach to disruptive technologies in the financial sector, writing:
“We look forward to continued progress on achieving resilient non-bank financial intermediation. We will step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated.”
At the Buenos Ares summit, the leaders also revealed aspirations to implement taxation for cryptocurrencies stating: “We will seek solutions for the international taxation issue accompanying the digitization of the economy and will continue to collaborate.”
The legacy left by Carney and the ongoing work of the FSB, G20 and other involved entities to regulate the crypto-space appears to be coming to fruition, which could prove transformative for the blockchain industry overall.
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