The G20 has recently adopted a sustainable development declaration during its meeting in Buenos Aires, reiterating its focus on the cryptocurrency industry and outlining future work directions and infrastructure development agendas. This statement was published on the official websites of the European Council and the Council of the European Union on December 1.
The joint declaration from the G20 Leaders' Summit, titled "Building Consensus for Fair and Sustainable Development," highlights that cryptocurrencies are a critical component for both an "open and resilient" financial system and for "supporting sustainable growth."
G20's Stance on Cryptocurrency and Financial Innovation
While acknowledging the importance of the cryptocurrency industry to the global economy, the G20 has committed to introducing anti-money laundering (AML) and counter-terrorism financing (CTF) measures based on the standards set by the Financial Action Task Force (FATF).
Additionally, the G20 participants expressed a positive stance toward non-bank financial institutions, recognizing the potential benefits of technology in the financial sector. However, this is contingent on tech innovators being able to manage associated risks. The G20 stated, "We look forward to continued progress in achieving resilient non-bank financial intermediation. We will intensify efforts to ensure that the potential benefits of financial technology are realized while mitigating risks."
Evolution of G20's Approach to Cryptocurrency
In the past, the G20's attitude toward cryptocurrency was less clear, with indications that it would continue to take a "hands-off" approach. In July of this year, a summary of decisions by finance ministers and central bank governors noted that "technological innovations, including underlying crypto-assets, can bring significant benefits to the financial system and the broader economy."
However, the document also pointed out that "crypto-assets can raise issues related to consumer and investor protection, market integrity, tax evasion, money laundering, and terrorist financing." Earlier, G20 leaders called for the global community to implement a "tax system for cross-border electronic payment services" concerning cryptocurrencies.
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Frequently Asked Questions
What is the G20's current position on cryptocurrency?
The G20 recognizes the importance of cryptocurrencies for sustainable growth and a resilient financial system but emphasizes the need for regulation to address risks like money laundering and terrorist financing.
How does the G20 plan to regulate cryptocurrencies?
The G20 intends to implement anti-money laundering and counter-terrorism financing measures based on standards set by the Financial Action Task Force (FATF).
What are non-bank financial institutions, and why are they important?
Non-bank financial institutions include entities like crypto exchanges and fintech firms that provide financial services without a banking license. The G20 acknowledges their potential benefits but stresses the importance of risk management.
Has the G20's attitude toward cryptocurrency changed over time?
Yes, the G20 has evolved from a more hands-off approach to advocating for structured regulation that balances innovation with consumer protection and financial integrity.
What risks do cryptocurrencies pose according to the G20?
The G20 highlights risks including consumer and investor protection issues, market integrity concerns, tax evasion, money laundering, and terrorist financing.
What is the significance of cross-border electronic payment services in this context?
The G20 emphasizes the need for a tax system tailored to cross-border electronic payments involving cryptocurrencies to ensure compliance and mitigate financial risks.