In a significant move towards global financial stability, the G20 Leaders’ Summit, held in New Delhi, has endorsed a comprehensive roadmap for cryptocurrency regulations. This decision comes in the wake of the rapid evolution of the crypto asset ecosystem and the potential risks it poses to the global financial system.
The Financial Stability Board (FSB) and the International Monetary Fund (IMF) have jointly authored a paper offering nations a roadmap for regulating crypto assets. This paper is expected to serve as a guiding document for countries aiming to establish a robust regulatory framework for cryptocurrencies. An insider with direct knowledge of the matter confirmed the discussions around the building blocks for these regulations.
The G20 member nations, in a unanimous decision, endorsed the FSB’s recommendations on the regulation, supervision, and oversight of crypto assets. This move aims to mitigate the risks associated with the burgeoning crypto ecosystem. The New Delhi Leaders’ Declaration highlighted the G20’s commitment to closely monitoring the fast-paced developments in the crypto world. It was further announced that the G20 Finance Ministers and Central Bank Governors would discuss the progression of this roadmap in their upcoming meeting in October 2023, scheduled to take place in Marrakech, Morocco.
The declaration stated, “We endorse the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation, supervision, and oversight of crypto assets activities and markets and of global stablecoin arrangements.” The G20 leaders, under India’s presidency, have urged the FSB and standard-setting bodies (SSBs) to ensure the effective and timely implementation of these recommendations globally. This is to prevent any regulatory arbitrage and ensure a consistent approach across nations.
In July, the FSB had released a 9-point list of recommendations for crypto asset regulation. This list emphasized the need for robust governance frameworks and defined responsibilities for issuers and service providers. The principles of ‘same activity, same risk, same regulation’ were at the core of these recommendations, ensuring a consistent oversight of crypto operations, including stablecoins.
The IMF-FSB Synthesis Paper, welcomed by the G20 leaders, aims to support a coordinated and comprehensive policy and regulatory framework. This framework takes into account the risks specific to emerging markets and developing economies (EMDEs) and the ongoing global implementation of FATF standards to address money laundering and terrorism financing risks.
Furthermore, the G20 leaders have called for the swift implementation of the CryptoAsset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS). The roadmap encompasses the ongoing work related to the implementation of policy frameworks, aiming to enhance global coordination, cooperation, and information sharing.
The Synthesis Paper, prepared by the IMF and FSB at the request of the Indian G20 presidency, also touched upon the topic of central bank-backed digital currencies. The G20 leaders welcomed discussions on the potential macro-financial implications arising from the introduction and adoption of Central Bank Digital Currencies (CBDCs), especially concerning cross-border payments and the international monetary and financial system.
