As the first meeting of finance ministers and central bank governors approaches the Financial Stability Board (FSB) has indicated that the G20 talks will not seek to regulate bitcoin and other crypto-assets as they do not pose a threat to global financial stablity.
The FSB released a letter on March 13th which states that crypto-assets are currently not a threat to financial stability. In part due to their low market cap value, which has never risen above 1% of global GDP. The letter stated:
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time”
The Bank of England Governor later explained that even at their peak cryptocurrency value paled in comparison to the notional value of credit default swaps prior to the 2008 financial crisis:
“In comparison, just prior to the global financial crisis (in 2008), the notional value of credit default swaps was 100% of global GDP.”
The talks are taking place 20th March – 21st March and are thought to have influenced the recent rally across most crypto-assets from a free fall that started on Friday. According to a report from Reuters there is also a lack of consensus to form firm regulatory policies on crypto-assets.
A Global Policy Will Be Hard To Issue
France, Japan and the U.S. have all indicated that a unified global policy for regulating crypto-assets is required due to the borderless nature of crypto-assets. However, it is thought that a global consensus will be hard to achieve in such a young and poorly understood asset class. Currently the global regulatory landscape is a patchwork of confusing and contradictory policies that vary wildly from jurisdiction to jurisdiction.
Mark Carney has gained notoriety within the crypto-community last month for delivering a speech called the ‘Future of Money” where he spoke extensively on crypto-assets. Mr Carney claimed cryptocurrencies failed as a medium of exchange, store of value and a unit of account and therefore he concluded that the prospects of cryptocurrencies ever replacing fiat were “tenuous at best”.