May 25, 2024
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G20 Summit: Shaping the Regulatory Future of Crypto Assets

India’s G20 presidency, with a focus on regulating cryptocurrency assets and other critical matters, has enlisted the International Monetary Fund (IMF) to play a central role in shaping the global approach to this challenge. In an exclusive interview conducted by Rahul Kanwal, the Executive Director of Business Today, the IMF’s Deputy Managing Director, Gita Gopinath, provided insight into this collaborative effort.

Gopinath commenced by underlining the importance of this partnership, stressing that it extends beyond regulatory considerations to encompass broader macro-financial implications. For the first time, the Financial Stability Board and the IMF have combined their efforts to comprehensively address the regulation of cryptocurrency assets, recognizing the necessity of adopting a holistic perspective. The primary goal is to identify necessary policy measures that strike a balance between regulation and financial stability.

In terms of monetary matters, a fundamental principle is to refrain from recognizing crypto assets like Bitcoin as legal tender, as doing so could jeopardize monetary sovereignty. Regarding financial stability, the guidelines recommend the licensing and registration of cryptocurrency asset issuers, with a focus on maintaining consistency in treating similar activities and associated risks.

Gopinath emphasized that while a common set of principles has been agreed upon, there is still work to be done in developing specific regulations. Importantly, she stated that “there is no discussion of prohibiting cryptocurrencies,” indicating a global consensus against such measures.

However, Gopinath expressed concern about the differing stances taken by countries regarding cryptocurrency asset policies. While acknowledging the need to tailor regulations to specific circumstances, she underscored the broad principles that most countries have reached a consensus on.

A consensus declaration signed by G20 leaders called for the swift implementation of the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS). They also requested the Global Forum on Transparency and Exchange of Information for Tax Purposes to establish an appropriate and coordinated timeline for exchanges by relevant jurisdictions.

When asked about the timeline for translating these principles into policy, Gopinath indicated that the cryptocurrency market would evolve from its historically unregulated state, leading to improved data and transparency. Differentiation will be based on whether crypto assets are employed for speculative investments or payment purposes, ultimately transforming the market from its previous “Wild West” reputation.

Image by WorldSpectrum from Pixabay

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