The G7 major industrialized democracies reportedly plan to push for stricter cryptocurrency regulations. According to a report, officials with knowledge of the plan said that the G7 aims to increase business transparency and consumer protection in the crypto sector.
The G7 will accelerate the pace of discussions towards a meeting of finance ministers and central bankers in mid-May, just before the summit in Hiroshima. However, the move follows the collapse of the major exchange FTX in November, which exposed the poor governance of the industry and sent shockwaves through financial markets.
It also comes amid investor concerns about sudden bank failures in the U.S., which included Silicon Valley Bank and Signature Bank. The G7 is seeking to state its collective efforts in a leaders’ declaration, with Japan already having virtual currency regulations in place.
The group is hoping to take the lead in formulating global standards, as the legal status of virtual assets and rules about them vary by country. Moreover, internationally, the Financial Stability Board and the International Monetary Fund have already released recommendations and policy papers on creating a regulatory framework for crypto assets.
According to officials, IMF directors have generally agreed that virtual assets should not be granted official currency or legal tender status. Issues associated with crypto assets are likely to be on the agenda of the upcoming G20 meeting in Washington in mid-April.
Nevertheless, as of now, the legal status of virtual assets and rules about them vary by country. However, the G7’s move could potentially set a precedent for other countries to follow in the future.
U.S. Government’s Missteps In Crypto Regulation
While the G7 was busy with their planning, an intriguing debate emerged. The U.S. government’s recent attempts to regulate the cryptocurrency industry have come under fire from Keiko Yoshino, executive director of the Puerto Rico Blockchain Trade Association.
Yoshino argues that recent directives from the Federal Reserve and executive branch designed to debank crypto firms, a pending lawsuit against the largest and most trustworthy U.S. exchange, Coinbase, and increasingly hostile rhetoric from Congress are far from appropriate.
Yoshino believes that the government has a role in overseeing the crypto industry, but recent regulatory announcements abuse power. She points out that crypto was born out of the financial crisis of 2008 and has emerged as an alternative to inflationary fiat currency.
Yoshino argues that the government should not discourage banks from holding crypto or people from buying it if they want to. Instead, she believes the government should explore crypto as a potential alternative to fiat currency.
She quotes Benjamin Franklin, who said:
Those who would give up essential Liberty to purchase a little temporary Safety deserve neither Liberty nor Safety.