Governments with the world’s largest economies want to make dealing in cryptocurrencies more difficult for consumers.
The G20 – which is made up of finance ministers and central bankers from the world’s 19 largest economies plus the European Union – wants to apply money laundering rules to cryptocurrency exchanges.
Although the ministers agree cryptocurrency is not an economic risk to the world economy, they want to exert more control over the sector.
Cryptocurrency started with Bitcoin with the idea that a virtual currency decentralised from the control of any government or central bank hosted on a peer-to-peer network would eventually take over as a global currency.
After a summit in Buenos Aires, Argentina, the group announced the international Financial Action Task Force (FATF) would monitor cryptocurrencies to tackle problems of money laundering and terrorist financing.
Command and control
Instead of regulating digital currencies, the governments will control access to cryptocurrencies through exchanges.
Money laundering rules come with strict ‘know your customer’ rules that will demand exchanges identify their clients and their tax status, so their personal and financial information can be passed to their home tax authority.
At the summit, the G20 set October as a deadline for drafting a strategy to monitor cryptocurrencies.
“While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant. … We reiterate our March commitments related to the implementation of the FATF standards and we ask the FATF to clarify in October 2018 how its standards apply to crypto-assets,” member countries said in a communique after the meeting.
Differing approaches
The G20 includes the USA, China, Russia, India, Brazil, Japan and South Korea and covers most of the world’s wealthiest investors who would want to participate in cryptocurrency investments.
Prior to the summit, the G20 had indicated that ‘specific recommendations’ to regulate cryptocurrencies would be delivered at the meeting, but they failed to materialise.
The message coming out of the meeting would suggest disagreement within the G20 about how handle cryptocurrency regulation – with some countries, like India and China banning all trading, and others, like the USA and UK supporting trading.
Meanwhile, Japan is developing rigid exchange rules in and showing a more receptive attitude to cryptocurrency trading than the rest of the G20.