FATF rules come into effect according to the G20 Summit release

FATF rules come into effect according to the G20 Summit release

The finance ministers and the central bank governors of the G20 group communicated the decisions taken at the Japan Summit, and one of them is dedicated to cryptocurrencies. The statement confirms the need to adopt FATF rules and also mentions the analyzes performed by two other organizations covering the crypto industry and the regulations required for the associated service providers.

Organizations for regulating the crypto industry

These are the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board (FSB). IOSCO “has a major role in setting international standards in the field of securities surveillance”, and FSB is “an international organization that oversees the global financial system and makes recommendations”.

The G20 decision mentions:

“Technological innovations, including those underlying cryptocurrencies, can provide significant benefits to the financial system and the economy. While encrypted assets do not pose a threat to global financial stability at this time, we remain vigilant about risks, including those related to consumer and investor protection, money laundering (AML) and countering terrorist financing (CFT). We reaffirm our commitment to apply the latest FATF standards to virtual assets and associated suppliers for AML and CFT. We look forward to the Agency’s adoption of the FATF interpretation note and guidance in its plenary at the end of this month.

We welcome IOSCO’s work on trading platforms for crypto-assets related to consumer and investor protection and market integrity.

We welcome the FSB report on regulatory approaches and potential gaps in crypto-assets. We request the FSB and the standardization bodies to monitor the risks and consider additional multilateral responses, as appropriate.

It also welcomes the FSB report on decentralized financial technologies and the potential implications for financial stability, regulation and governance, and how regulators can strengthen dialogue with a broader stakeholder group.

We also continue to step up efforts to improve cyber resilience and welcome the progress of the FSB initiative to identify effective response and recovery practices from cyber incidents. ”

Cryptocurrencies are not dangerous, but they must be regulated. The FATF rules come into force

The G20 does not seem to rule out the usefulness of cryptocurrencies and blockchain technology and seems to be willing to tolerate them. The threshold at which these are no longer acceptable – and when a complete ban is called into question – is the influence of Bitcoin on the stability of the global financial system. In other words: as long as states retain sovereignty over the largest share of funds, Bitcoin is manageable.

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Of course, Bitcoin needs to be regulated. The three G20 issues that need to be minimized by regulation are the risks to consumers and investors (eg pyramid games, ponies, shitcoins and other fraud models), money laundering and terrorist financing.

So far, the G20 decision does not mean many changes in practice. Individual states will implement FATF rules, and companies that work with cryptocurrencies will be subject to those rules as well as those providing similar services with fiat currencies and stock exchanges. This is largely standard, but it could mean that companies that do not comply with these rules will face more controls in the future.

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