The G20 may establish global cryptocurrency regulations ahead of the September Leaders' Summit to address the risks and opportunities of cryptocurrencies
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With the support of the Indian presidency, G20 countries, assisted by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), are set to formulate and implement what could potentially be the world's first global cryptocurrency regulations before the September Leaders' Summit. These regulations will cover regulatory requirements for cryptocurrencies and stablecoins, among other crypto assets, to prevent potential negative impacts on markets, investors, users, and the environment while encouraging their innovative potential.
Reportedly, these regulations will be based on the FSB's "Regulatory Recommendations for Stablecoins" published in October of last year. These recommendations include ten high-level principles, encompassing effective governance, risk management, transparency, market integrity, prevention of financial crimes, and consumer protection, among other aspects. Additionally, the regulations will take into consideration some of the issues raised in the IMF's "Cryptocurrency: Key Issues" report published in April of this year, such as defining the nature of crypto assets, ensuring tax compliance, and coordinating cross-border regulation.
The G20 countries represent the world's largest economies, accounting for over 80% of global GDP. Among these nations, ten have already fully legalized cryptocurrencies, including Japan, the United States, the United Kingdom, Germany, France, Italy, South Korea, Australia, Saudi Arabia, and Turkey. All G20 countries are considering or refining regulatory frameworks for cryptocurrencies.
Since its inception in 2008, cryptocurrency has become a significant component of the global financial system. Cryptocurrencies have the potential to reshape existing financial structures and bring about a revolution in the currency and payment methods of the next generation. However, these changes also come with concerns regarding the impact of cryptocurrencies on financial stability, currency sovereignty, consumer rights, environmental sustainability, and more. As a result, governments around the world are seeking to establish reasonable regulations to mitigate these risks while promoting innovation in this field.