The G20 Finance Ministers and Bank Governors held their first meeting this year in Riyadh, Saudi Arabia, on 22 and 23 February. They discussed a number of financial issues, but cryptocurrencies and stablecoins were among the notable ones. In addition, the G20 issued a statement in support of the implementation of the cryptocurrency policies established by the Financial Action Task Force (FATF).
The Libra Association is preparing to launch the Libra stablecoins soon, and some European and United States agencies wondering what to do next. According to FATF, as government agencies across the world work to understand digital currencies, laws and regulations pertinent to stablecoins are not being implemented fast enough. A communique published on Feb. 23 read:
“Building on the 2019 Leaders’ Declaration, we urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers.”
Going forward, finance ministers and central bank officials; reiterated their support for the FATF as the AML and CFT standard-setting body. While stressing the previous agreements, they highlighted the role of the FATF in helping to combat and prevent money laundering, terrorist financing and proliferation financing.
In fact, the G20 held a meeting in Osaka Japan back in June 2019. Back then, the members agreed to follow and implement the standards set by the FATF in relation to crypto-assets and other related services. The AML Supervisory Agency began tracking how countries enforced the policies in October last year.
‘Global Stablecoins’ to be Evaluated Appropriately before Launch
Moreover, through a letter drafted to G20 finance ministers and central bank governors, the Financial Stability Board (FSB) chairman, Randal Quarles, raised concerns on the way crypto is affecting the global economy. Randal’s biggest concern was that regulatory bodies are toiling to match that pace. He wrote:
“FSB members recognize the speed of innovation in the area of digital payments, including so-called ‘stablecoins’. We are resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”
In addition, the finance ministers and central bank officials discussed stablecoins during the meeting. The G20 expects to receive more stablecoins and virtual assets reports from global standard-setting bodies such as the International Monetary Fund (IMF), the FATF and the FSB.According to the G20, those stablecoins with the ability to gain at scale after launch, are global stablecoins. These include Facebook’s Libra stablecoin and the Chinese digital yuan. The communique reads:
“We reiterate our statement in October 2019 regarding the so-called ‘global stablecoins’ and other similar arrangements that such risks need to be evaluated and appropriately addressed before they commence operation, and support the FSB’s efforts to develop regulatory recommendations with respect to these arrangements.”
Recently, at a hearing before the House of Representatives Financial Services Committee, with Jerome Paul in attendance; the Chinese government has been mentioned as an entity with the potential to grow on a scale. This ended with a request from Jerome Paul to start working on the digital dollar to counter the threat posed by China.
Regulatory Response to Crypto Across the Globe
In conclusion, the FSB is weighing on holding a public consultation in April; on regulations to weigh the risks and benefits of stablecoins. As agencies are forcing exchanges in Brazil to close shops due to fines; other exchanges continue to operate in Europe without proper licencing and oversight. The FSB which consists of regulators, bankers and government officials from the G-20 nations; was formed back in 2009.