Results of the G20 regulators in the cryptosphere

Decisions on cryptocurrency and market reaction

The G20 summit will be held from November 30 to December 1, 2018. Heads of central banks and finance ministers of these countries met in the framework of preparation for it at 19-20 March. Two major topics were discussed:

New technologies. Attention was paid to crypto-active, information security and digitalization of the economy.

Traditional economy. The focus of this topic was the financing of infrastructure — including private — and the impact of its development on the economy and the social sphere.

We collected the main decisions of regulators within the topic «new technologies» and followed the market reaction to them.

Contents:

Digital assets are not currencies

G20 countries have decided not to recognize cryptocurrency means of payment due to the absence of «signs of sovereign currencies». Cryptocurrencies will be treated as assets and regulated on the basis of FATF standards — the International Financial Action Task Force on Money Laundering.
Klaas Knot, Governor of the Bank of the Netherlands and Chairman of the Financial Stability Board (FSB, one of the G20 structures):

«I don’t think any of these cryptos satisfy the three roles money plays in an economy. [means of payment, means of accumulation, measure of value — approx. DTI].
Whether you call it crypto assets, crypto tokens — definitely not cryptocurrencies — let that be clear a message as far as I’m concerned.»

Ksenia Yudaeva, First Deputy Chairman of the Bank of Russia:

«The view was expressed that, as a settlement tool, cryptocurrencies are hundreds of times less efficient than traditional payment systems, and are an unreliable asset in terms of preserving value.»

#interesting Recognize cryptocurrency assets and proposed in the Russian bill «On Digital Assets»

The agency Bloomberg notes that if the cryptocurrency is considered an asset, transactions with them can be taxed on capital gains.

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The cryptosphere does not threaten the economy

Financial Stability Board so far refused to strict regulation of digital assets, including Bitcoin. The politicians decided that cryptocurrencies are not a threat to the world economy.
From the FSB management letter to the finance ministers and the heads of the Central Bank of the G20 countries:

«The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. This is in part because they are small relative to the financial system. Even at their recent peak, their combined global market value was less than 1% of global GDP. In comparison, just prior to the global financial crisis, the notional value of credit default swaps was 100% of global GDP.»

Nevertheless, the Financial Stability Board pointed to some risks of the cryptosphere, including its opportunities for money laundering and terrorist financing.
Ksenia Yudaeva, First Deputy Chairman of the Bank of Russia:

«All participants in the discussion recognized that cryptocurrencies bear significant risks in the sphere of consumer and investor rights protection, tax evasion and money laundering. In this regard, everyone spoke in favor of continuing monitoring the situation. Many countries supported the need to develop common regulatory principles in order to avoid regulatory arbitration.»

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The discussion will continue in July

Representatives of the G20 decided that national regulators need to monitor the digital assets market and conduct risk assessment. FSB also proposed to continue international cooperation for monitoring of block and cryptocurrencies.
Discussion of the essence and regulation of cryptocurrency will continue in July 2018. By this time, national Central Bank and international organizations, including the FSB, should formulate their proposals.

#reference In accordance with the president’s instruction, the draft law on the regulation of the cryptosphere in Russia should also be adopted by July 1 of this year

Mark Carney, the head of the Bank of England and the Financial Stability Board:

«In July, we must make precise and very specific recommendations — not by what we regulate, but by what information we need for this.»

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Market reaction

On March 17-18, on the eve of the G20 discussion, there were sales in the cryptocurrency market. Investors were waiting for news of the intention to introduce strict regulation.Падение криптовалют в преддверии дискуссии G20During the first day of the meeting (March 19) bitcoin grew by about $ 1000. This happened against the background of statements by regulators that there was no significant risk to the world economy from digital assets.

Most altcoins also came out in the green zone after falls the previous day.


Also published on Medium.