We’ve all been waiting for what G20 has to say about cryptocurrencies. Well to begin with, their official document is calling it Crypto-assets and not currencies. There is obviously a lot of people trying to grab the piece of the pie by reporting out-of-context information about the outcome of G20 on Crypto-assets too. It only made sense for us to wait it out and report what they ‘officially’ have to say.
What did G20 Argentina Summit decide on Crypto-Assets?
The official communication says that G20 acknowledges the technological innovation that Crypto-assets and does have a potential to improve the inclusiveness of the Financial systems. Then they went on to say that Crypto possess a lot of risk like money laundering, tax evasion, terrorist funding and so on. They added ‘Crypto-assets lack the key attributes of sovereign currencies’.
In conclusion, G20 has asked few international agencies to monitor crypto-assets and bring back a report in July to discuss regulations around it.
This is the full statement from the official report.
We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly. Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing. Crypto-assets lack the key attributes of sovereign currencies. At some point they could have financial stability implications. We commit to implement the FATF standards as they apply to crypto-assets, look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.
——Issues for further action——
We ask the FSB, in consultation with other SSBs, including CPMI and IOSCO, and FATF to report in July 2018 on their work on crypto-assets.
What are FSB, SSB, CPMI, IOSCO, FATF?
The perks of blogging is the opportunity to go on a journey of discovery with the user. I did not understand these terms in the beginning. I know how hard it could be for some of our readers too. Let’s dig into them
FSB – Financial Stability Board
An international body that makes recommendations on policies to maintain Global Financial Stability.
SSB – Standard Setting Bodies
There are several standard settings bodies under the FSB. These SSBs recommends policies, standards and regulations to maintain the Global financial Stability.
CPMI – Committee on Payments and Market Infrastructure
The CPMI promotes the safety and efficiency of payment, clearing, settlement and related arrangements, thereby supporting financial stability and the wider economy.
IOSCO – International Organisation of Securities Commissions
IOSCO is the international policy forum for national regulators of securities and futures markets. The organisation develops and promotes standards of securities regulation in order to maintain efficient and sound markets.
FATF – Financial Action Task Force on Money Laundering
A joint intergovernmental committee to recommend policies around money laundering and terrorist funding. The FATF works to generate the necessary political will to bring about the required national legislative and regulatory reforms.
Fun fact – Despite the G20s, FSBs and SSBs of the world, the global debt is $63 Trillion, may be we owe it to the other planets of the Solar System.
July 2018 Expectations:
The next meeting by the G20 is set in July this year to come up with regulations on Crypto-assets. They will review the recommendations of the above agencies. As it stands today many governments are in the process of building their own regulations around crypto-assets. As far as India goes, Finance minister on the day of the Budget called Cryptocurrencies as “Not a legal tender”. The government has set up a committee to provide recommendations on Crypto assets by the end of 2017-18.
Business as Usual in India:
With over 38 exchanges, India is becoming a thriving market for the cryptocurrency trade. The volumes are at only 10% of the peak the exchanges experienced in Nov-Dec 2017 but the growth doesn’t seem to be slowing down. As the Fiscal year comes to an end, another worry looms over the investor – ‘Income Tax Returns’. CAs around the country have different opinions about accounting for tax but unless the government issues guidelines, it is either Capital gain or Business income.