The world is to descend on Buenos Aires on Monday where 29 finance ministers, 20 central bank governors, and 10 heads of international organizations are to meet.
On the agenda are cryptocurrencies, or as some bankers have now started calling them, crypto-assets. The agenda says:
“The technology behind crypto assets has the potential to promote financial inclusion. At the same time, however, it is important to analyse its implications to financial stability, tax evasion and financing illegal activities.
The issue is an important item on the meeting agenda; delegates will consider a common response that would mitigate the risks without discouraging innovation.”
The focus appears to be on anti-money laundering (AML) and know your customer (KYC) requirements, which are generally applied by most exchanges.
Japan, however, says some regulators have been looser on such requirements. Tokyo, of course, recently licensed many exchanges, but the rest have been far slower to move.
Including the European Commission, which raised AML only recently. A topic that is now settled for this space and was far more timely in 2013 when US’s FinCen first made it clear exchanges had to be licensed.
“Discussions will focus on anti-money laundering steps and consumer protection, rather than how cryptocurrency trading could affect the banking system,” an official tells CNBC before adding:
“The general feeling among the G20 members is that applying too stringent regulations won’t be good.”
Expectations for consensus appear low considering the varied approaches taken by different jurisdictions, but they should be able to agree, and this space would probably support an agreement, that holds exchanges to a higher standard because they are custodians of potentially billions.
Competition in this space has to some extent increased standards considerably, but regulators have been far too slow to license new entrants, thus legitimizing them and so increasing competition and by extension consumer protection.
One area where they all fall short is margins, a vital trading tool that is non existent in regulated crypto exchanges. That has forced market participants towards shadier platforms provided by individuals willing to take risk to skirt regulations because there is significant demand for their services.
Yet it is unlikely bankers and ministers will hold themselves and their bureaucracy to account for being far too slow in approving or even in considering applications.
“Any discussion in the G20 next week will be likely to be forward looking, discussing the pros and cons of regulation, but don’t expect concrete action, it’s more about comparing experiences so far,” Benoit Coeure, who chairs the BIS committee on payments and market infrastructure, said.
Coeure has apparently warned Central Banks against issuing digital currencies to the public, something which would prevent commercial banks from money printing.
That matter however is not up to G20, but up to the people of Switzerland, who are to hold a binding referendum on June the 10th to determine whether they should switch to debt free money.
Japan’s finance minister apparently might not make it to the crypto G20. He is mired in a corruption scandal regarding altered records of a discounted sale of state-owned land.
A very timely scandal that might by itself show the benefits of blockchain technology where you can’t just alter data, but Japan’s top diplomat will be there.
What will come of this meeting remains to be seen, but the baby boomers that will fill the room would do well to listen to their sons and daughters and take a “do no harm” approach.
Because as we are seeing with scandal after scandal and money mismanagement after money mismanagement, they need a lot more accountability and legitimacy. Both of which blockchain tech may provide.