The 2018 G20 Summit held in Buenos Aires, Argentina from Nov. 30th to Dec. 1st has come and gone, but its resolutions may be in place for a long time to come. The G20 leaders signed a document pledging sustainable development and consensus building. Among a host of other things, the bloc leaders agreed to “regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed.”
Call for a Global Effort in Regulating Digital Assets
The G20 declaration touched on the international taxation of cryptocurrencies, with a plan for the member states to continue to work together to seek a consensus-based solution to address the impacts of the digitalization of the economy on the international tax system with an update in 2019 and a final report by 2020.
The leaders called for global efforts in regulating cryptocurrencies and curbing financial crimes such as money laundering and financing of terrorism. Germany, a member of the G20 bloc has been calling for international cooperation in regulating digital assets.
The Financial Stability Board (FSB) released a report on Oct. 10th on the future implications of digital assets on financial stability. In the report, the FSB concluded that digital assets do not pose a threat to global financial stability at the moment because of its relatively small size. These sentiments are also shared by Jerome Powell, the chairman of the U.S. Federal Reserve.
The market capitalization of the crypto market peaked at $830 billion in early January but has lost close to $700 billion since then, falling to just a little over $130 billion.
However, the report noted that digital assets “raise several broader policy issues and vigilant monitoring is needed in light of the speed of market developments.” The report highlighted several FSB members were taking a range of approaches to regulating cryptocurrencies.
The G20 declaration announced the appointment of Randal K. Charles as the chair of the FSB and would be deputized by Klass Knot.
Keeping in Line With FATF Standards
The Financial Action Task Force (FATF) was established in 1989 as an initiative of the G7 and develops policies for combating money laundering and terrorism financing. The G20 wants to “step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated.”
While the FATF acknowledges that the legitimate use of cryptocurrencies offers several benefits, the agency thinks that digital assets present AML/CFT risks that include anonymity, limited identification & verification of cryptocurrency users, lack of a central oversight body, and lack of clarity and supervision in enforcing AML/CFT compliance.
CipherTrace, a San Francisco-based blockchain security firm published a research report that shed more light on how the theft of digital assets and their use by criminals has “ushered in a new era of high-tech virtual money laundering.” The report further stated that cleaning crypto money is a complicated task that involves several steps.