G20 Committed to Crypto Regulations Framework

Global finance ministers and central bankers from the G20 have reaffirmed their multilateral support of crypto-industry regulations, including anti-money laundering (AML) as well as countering the funding of terrorism (CTF).

Following the G20 Finance Summit in Fukuoka, Japan this weekend, the financial leaders made the commitment to applying the rules in a communique published on the website of the Japanese Ministry of Finance on Sunday. The crypto regulations will be finalized by the Financial Action Task Force (FATF) this month.

In the Communique, the G20 finance leaders have reiterated their commitment to the various initiatives underway. They support regulatory efforts that protect consumers and investors, support market integrity and clamp down on AML and CFT.

According to the reports, the FATF standards are expected to set tough operating procedures for crypto exchanges, going beyond the basic know your customer (KYC) regulations that most major exchanges are currently using.

In addition to verifying and keeping records of their users’ identities, exchanges and other service providers would have to pass customer information to each other when transferring funds, just as banks are required to do so, which is known as “travel rule” in the US.

The leaders that co-signed the document state that they urge relevant institutions to give greater consideration to crypto assets and consider appropriate action:

“We ask the FSB and standard setting bodies to monitor risks and consider work on additional multilateral responses as needed.”

The joint statement highlights as well that “technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy.” The finance leaders put their support behind crypto-assets whilst also remaining vigilant in monitoring the risks they pose.

“While crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT).”

It is further noted that the finance ministers and central bank governors are seeking possible additional measures and welcome ongoing work concerning crypto such as regulatory approaches and potential gaps in crypto-asset regulation carried out by international regulatory bodies, the International Organization of Securities Commissions and the FSB.

Notably, all involved parties look forward to the adoption of the Financial Action Task Force’s (FATF) Interpretive Note and guidance on crypto assets “at its [FATF’s] plenary later this month.”

Last but not least, the G20 have addressed the issue of hacks within the crypto community, stating:

“We also continue to step up efforts to enhance cyber resilience, and welcome progress on the FSB’s initiative to identify effective practices for response to and recovery from cyber incidents.”