G20 governments intend to develop a global policy to govern and guide the cryptocurrency sector against growing uncertainties.
The G20, or Group of Twenty, is an intergovernmental forum comprising 19 countries and the European Union. It addresses significant global economic issues, such as international financial stability, climate change mitigation, and sustainable development.
India holds the G20 presidency and has been hosting the group’s first finance and central bank deputies meeting on December 13-15 in Bengaluru.
On Wednesday, India’s federal economic affairs secretary Ajay Seth revealed that the G20 nations would evaluate, assess and monitor the effects of cryptocurrencies on the economy, monetary policy, and the banking sector to reach a policy agreement.
According to Reuters, Ajay Seth said, “The regulation should flow from the policy view taken. One of the priorities put on the table is to help countries build a consensus for a policy approach to the crypto assets.”
There have been several calls to develop global regulations for the cryptocurrency sector. FTX’s fiasco and the disspiriting records of the market’s valuation this year have called for better and stricter regulation of the crypto sector.
Sam Bankman-Fried, FTX’s previous CEO, was charged by SEC with fraud and illegitimate transfer of customers’ funds to a private firm.
Read more: SEC charges Sam Bankman-Fried with fraud
G20’s intended universal policy for cryptocurrency
On July 11th 2022, the Financial Stability Board announced that it would initiate a formidable universal policy for cryptocurrencies in October after the recent debacle that has flooded the market and indicated that the cryptocurrency sector might not survive and reach its full potential without stringent policies.
FSB is a committee that includes treasury officials, regulators and central banks from the Group of 20 economies.
The body previously said it maintained a distance from the cryptocurrency sector because it did not notice a systemic risk in its structure. However, the FSB stated that the reel of downcasting news from the sector had revealed its volatility, structural incompetence and growing barriers to a wider palpable mishap.
“The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallisation of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem,” the FSB said in a statement.
The value of bitcoin, the largest cryptocurrency, has slumped some 70% since its November 2021 record of $69,000 and was trading at $20,422 on Monday, leaving many investors nursing losses.
TerraUSD stablecoin collapsed earlier this year, and withdrawals and transfers from major crypto firms Celsius Network and Voyager Digital have rattled markets.
Stablecoins should be captured by robust regulation if they are to be used as a means of payment, the FSB said.
“The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets,” the FSB said.
“The FSB has no lawmaking hegemony but its members commit to applying its regulatory principles in their own jurisdictions. The watchdog is lagging the European Union, a leading member of the FSB, which agreed on comprehensive new rules for the crypto market this month.” Economictimes reported.
The FSB said crypto assets are predominantly used for “speculative purposes” but don’t operate in a “regulation-free space” and must comply with relevant existing rules.
Many countries require crypto firms to have anti-money laundering controls.” FSB members are committed to using the enforcement powers within the legal framework in their jurisdiction to promote compliance and act against violations,” the FSB said. But the latest report says that the body is ready to develop the policy that will serve as the checks and balances of the cryptocurrency sector.
Reports from the meeting in Bengaluru claim that the intention fully covers managing universal debt vulnerabilities, fueling finance for climate sustenance and enhancing development objectives while solidifying multifaceted development banks and numerous others.
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