G20 Suggests Multilateral Response to Crypto; Reaffirms Application of Tough New FATF Rules

In a joint communique posted on the website of Japan’s Ministry of Finance, the G20 finance leaders have requested the Financial Stability Board (FSB) and other global regulators to monitor risks around crypto assets. Furthermore, the board also suggested a multilateral approach to regulate crypto and reaffirmed that tougher Financial Action Task Force (FATF) rules are coming. The details were revealed shortly after a G20 meeting that was held in Fukuoka, Japan.

The G20 group asked the FSB and standard-setting bodies to monitor risks and consider work on additional multilateral responses as needed. Across the world, regulators have been struggling to define comprehensive legislation for the crypto community. More often than not, the attempts to control and tame the crypto markets have actually put hurdles in the way of growth and innovation in the sector.

The document reads:

“Technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.”

This same sentence also appeared in another document released after a G20 summit. This statement is a testament to the fact that crypto is no longer a dark web entity that is only used in shady deals. It is a powerful technology that can pave the way for future development and technological advancements and the G20 group acknowledges that.

However, the optimistic tone is short-lived in the document as it follows the previous statement with the following one:

“While crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”

The G20 group of nations has reaffirmed it will align with standards for anti-money laundering (AML) and countering the funding of terrorism (CTF) set to be finalized by the Financial Action Task Force (FATF) this month. “We reaffirm our commitment to applying the recently amended FATF Standards to virtual assets and related providers for AML and CFT,” the document further states.

G20’s Tougher Standards for Crypto Exchanges

The new FATF standards that are to be applied are expected to set tough operating conditions for crypto exchanges.

So far, crypto exchanges, as well as cryptocurrencies, have vastly been in the grey area regarding which regulatory standards they fall under. Institutions and committees, both local and international, have long threatened a tighter noose around the crypto trading community in order to curb money laundering and fraud through it.

“We also continue to step up efforts to enhance cyber resilience, and welcome progress on the FSB’s initiative to identify effective practices for response to and recovery from cyber incidents,” the document affirms about the hacks that have caused a loss of billions of dollars to investors over the last couple of years.