Cryptocurrency is about to take a major step forward in global acceptance with the upcoming G20 summit poised to lay out model regulatory framework for integrating crypto into existing and new financial systems. India, acting as the current leader of the G20, will be bringing forward recommendations from the G20’s Financial Stability Board (FSB) and the International Monetary Fund (IMF) for discussion with a goal of implementing global regulations.
The FSB and IMF collaborated to produce the paper of recommendations, which strongly impresses the importance of the need for crypto regulation due to the potential for “macroeconomic and financial stability risks” that result from an unregulated market. Along with making the case for why regulation is important, the paper comprehensively discusses the factors that officials need to keep in mind when setting regulation for their country or district.
To make it even easier for strong and fair crypto regulations to be adopted around the world, the FSB and the IMF included a roadmap in the paper for entities to follow to ensure they are taking the necessary steps to keep themselves, their businesses, and their citizens safe. For particularly vulnerable markets such as emerging economies, additional regulatory recommendations are included.
In addition to providing regulatory guidelines for countries and territories of any size, the paper includes recommendations on creating and strengthening a global network of cooperation and communication in the crypto sphere to quickly address any data gaps.
Of course, these recommendations won’t be binding, but it could set an important global standard. One thing is sure, countries that adopt sensible cryptocurrency regulations are likely to see a crypto boom, and nobody wants to fall behind the curve. Cryptocurrency could very well be the next big gold rush, and regulation, particularly with an easy to copy-and-paste recommendation from the IMF approved by G20, could speed up the regulatory arms race happening around the world. So far only a handful of countries, such as El Salvador, have truly embraced cryptocurrency, but many have some small written or unwritten policies on it. Many experts in cryptocurrency are waiting cautiously as they hope for strong and smart regulations for the market, which will protect consumers and encourage larger institutional players to get involved too. This is why the G20 recommendations around cryptocurrency regulation will be so important. They could kickstart a wave of regulations, and provide some generally consistent rules across the globe for countries to follow.
India will be focusing its discussion about cryptocurrency around the paper from the FSB and IMF, including reading the summary during its opening address. Once that happens, countries or regions that already have crypto regulation in place – such as the EU – will have the opportunity to enhance their existing regulations, while countries that haven’t yet established a regulatory framework – such as the US – will be given a major leg up to the world stage.
As the paper specifies, “Comprehensive regulatory and supervisory oversight of crypto-assets should be a baseline to address macroeconomic and financial stability risks.” [emphasis added] In no uncertain terms, the world’s leading financial experts are calling for the fast and effective regulation of the crypto market at the global level – and with the level of financial risk in play, you can bet it will unfold quickly as the barriers to regulation dissolve.
With more regulation comes more security for investors around the world, and that means the value of the cryptocurrency market will accordingly increase. For those looking to derive financial gain from crypto investments, getting in before the surge in global interest likely to grow from widespread regulation is more than worth considering.
Images by Katie Moum & Traxer on Unsplash
