Japan To Urge G20 Nations To Create Global Regulation On Cryptocurrency

Pratik Makadiya

Japan is looking to bring cryptocurrency to the discussion table at the upcoming G20 summit on March 19 - 20. Specifically, they want to discuss methods on cutting down the use of cryptocurrencies for money laundering with a global regulatory framework.

Japan, an influential member of the G20 - the international forum for governments and central bank governors - is known to be the first country to have developed a regulatory framework for cryptocurrency trading. The country has become more vigilant on scams and illegal activities surrounding the crypto space after recently Tokyo-based crypto exchange Coincheck Inc. was hacked resulting in a $530 million theft.

Crypto In  Spotlight At G20

According to CNBC, a government official confirmed that cryptocurrencies will be a topic of dialogue in the forthcoming two days G20 meet in Buenos Aires, Argentina. The G20 will be the stage where finance ministers and central bankers from the G20 nations will discuss international financial stability.  

As per the CNBC report, a government official revealed that the discussion will revolve around money laundering and consumer protection. The government official stated:

“Discussions will focus on anti-money laundering steps and consumer protection, rather than how cryptocurrency trading could affect the banking system. The general feeling among the G20 members is that applying too stringent regulations wont be good.”

Gov Official - CNBC

However, the chances for the leaders of G20 to agree upon a common global regulation seems to dull. Even Japanese policymakers are concerned as the degree of regulatory grip differs between G20 nations.  The primary reason being different approaches adopted by different countries to tackle the same problem. Some countries might have a stringent law against money laundering while others may be lenient. Thus leaving possibilities of loopholes for criminals to make use of cryptocurrencies for money laundering, especially considering the borderless nature of cryptocurrencies.

France And Germany 

France based Financial Action Task Force (FATF), that is responsible for forming policies to combat money laundering, will submit a report on methods to prevent criminals from using digital currencies for money laundering. The 37-nation FATF is an intergovernmental organization established by the G7 to tackle money laundering. As cryptocurrency has gained popularity, the FATF will recommend strategies to restrict the use of cryptocurrencies for money laundering.

Last month, a joint request had been submitted through a letter by French Finance Minister Bruno Le Maire, Chief of Staff of the German Chancellery Peter Altmaier and central bank governors of France and Germany to the Argentine Finance Minister -  Luis Caputo, to include digital currencies in G20 agenda.

The letter stated,

“We believe there may be new opportunities arising from the tokens and technologies behind them. However, tokens could pose substantial risks for investors and can be vulnerable to financial crime without appropriate measures. In the longer run, potential risks in the field of financial stability may emerge as well.”

Luis Caputo

Meanwhile, the European Union’s watchdog recommends a provisional set of rules to restrict cryptocurrencies use in money laundering and terrorist financing. According to Japanese officials, the interim solution will not hinder the growth of blockchain technology, while at the same time protecting consumers from illicit activities relating to cryptocurrencies.

It is certain that the G20 meet will be a global discussion stage for cryptocurrencies and very important for crypto enthusiasts. It could decide the fate of cryptocurrencies especially the legal recognition angle of it.

The chances on a agreed and actionable plan regarding cryptocurrencies is unlikely as their technology is constantly evolving and ill defined. However, it is hoped that the summit will provide a chance to further the debate.