G20 Keeping Close Eye On Blockchain Revolution, Talks About Crypto Regulation
The significant progress made by blockchain, especially its most explored application cryptocurrencies, and digital assets is phenomenal. In just one decade, the technology has caught the eyes of most influential organization and personalities; everybody seems to talk about the developments in the blockchain.
In recent times G20 nations have flourished their attention upon blockchain, mainly towards cryptocurrencies. In a meeting, to discuss the various issues like international trade and investments in global infrastructure in March 2018, the G20 central bankers and finance ministers also discussed upon the growing trend of the blockchain adoption. The attention of governments towards crypto regulations and increasing number of ICO and cryptocurrency related frauds were also the major reasons for growing attention towards the blockchain and cryptocurrencies.
How G20 plans to handle cryptocurrencies and the blockchain?
The objective of the G20 forum is to employ regulations such that the potential innovations in this futuristic field aren’t affected while also suggesting ways to de-risk crypto market. G20 aims to dispel the worry of entrepreneurs and investors that government interference and regulations will hamper the innovations in the blockchain. The reality is, government cooperation offers the foremost path for development in the blockchain and it would also accelerate the pace of its adoption. The next G20 meeting is scheduled for November and it is speculated that many positive reforms will be done towards the adoption of blockchain into mainstream society.
Since its inception, the G20 forum has been trying to maintain financial stability across the globe, to strengthen the resiliency of global financial systems, and to promote good economic governance policies. G20 along with FSB (Financial Stability Board) has been studying about the impact of cryptocurrencies on various fields of the economy for a long time and it also holds the power to craft a framework that has trans-national acceptance. A trans-national framework ensures a way to minimize the risk posed by regulatory arbitrage to nations where firms can exploit loopholes in order to gain advantages based on geography.
What agendas would be fulfilled?
The prime step that can be taken by G20 and FSB is finding a way to define crypto-assets and classify them into payment tokens, utility tokens, and security tokens. Defining cryptocurrencies would give crypto stakeholders a solid ground to build projects and it would also give governments more guidance on how to regulate crypto trade. Some of the regulations must be incorporated from various countries who have already experimented with the blockchain. Countries like Japan with its Financial Service Agency and U.K.’s Financial Conduct Authority have done a lot to promote blockchain into mainstream economy by providing both flexibility and capacity to evolve. As the scope of cryptocurrencies widens the attention to know-your-customer (KYC) and anti-money-laundering (AML) compliance will surge. It would be tough for the Exchanges to understand how banks will interact with cryptocurrency and how taxes will be collected. All these issues can be solved only if cryptocurrency is backed by a global organization like G20 and FSB.
How will the market react to it?
Industries need to understand that increased regulation would not hinder the growth of cryptocurrencies or blockchain, neither will it refrain the entrepreneurs and investors to invest and work on it. A Zug or Valletta Accords, comparable to Basel, could create a framework where nations agree on basic tenets for regulating cryptocurrency with active input from the industry. Regulating crypto trade with the cooperation of industry stakeholder would pace the adoption of blockchain by giant firms, thus, accelerating the developments in the blockchain. If regulations are done with the aim of reducing the risks in crypto trading then it would reassure industrial investors and would certainly pour in more funds to unleash the tremendous potential of the blockchain and its power to transform our society.
It is time that the blockchain stakeholders and governing agencies work together to make a better society and join hands to shape the promising future of blockchain and its numerous applications.