The G20 Summit has just wrapped up for the year and discussions of new cryptocurrency regulations have emerged. Held in sunny Argentina over the weekend just past, the leaders have declared that stringent crypto regulations will be imposed to counter terrorism and money laundering practices.

The Best Bits of the 2018 Summit

There was Trump walking off stage instead of taking a group photo with other world leaders. There was also Angela Merkel checking her notes after forgetting who Australia’s current prime minister was. But for many in the crypto community, what stood out at the 2018 G20 Summit was discussion about cryptocurrency regulation.

This year we have focused on the following pillars: the future of work, infrastructure for
development, a sustainable food future and a gender mainstreaming strategy across the G20 agenda.

This comes after the recent IMF World Bank meeting brought fintech, blockchain and cryptocurrency to the forefront in October this year. Now, with the G20 Summit, global leaders are realising it’s becoming increasingly important to acknowledge and address the role of digital assets.

Based on the pillars of “the future of work”, an “infrastructure for development”, a “sustainable food future” and a “gender mainstreaming strategy”, the 2018 Summit had quite the agenda to live up to.

An image of world leaders standing together with right hand raised
The leaders at the 2018 G20 Summit over the weekend.

But with the Summit meetings done and dusted, what remains now is the all-encompassing G20 declaration that emerged after the weekend. It includes a promise to regulate crypto in an effort to reduce money-laundering and acts of terrorism. This sits alongside promises to uphold the Paris Agreement to reduce the impacts of climate change, to promote greater gender equality in the workplace and respond to the needs of refugees.

An excerpt from Section 25 reads that:

“We will regulate crypto-assets for anti-money laundering and countering the
financing of terrorism in line with FATF standards and we will consider other responses as needed.”

But do Crypto Regulations Even Work?

But not everyone in the crypto community is convinced. Prominent crypto commentator and analyst Joseph Young instead calls these promises for regulation “laughable” and nearly impossible to achieve. He uses the 2018 Danske Bank laundering scandal as an example of how regulation does not always guarantee real-world protection. And when considering anonymous privacy coins like Monero, Zcash or Dash, Young provides a valid point.

Unlike Bitcoin, privacy coins are virtually untraceable. Coins like Monero offer anonymity and are untraceable, make it extremely challenging to enforce crypto regulations. Because of this, a blanket solution like the G20’s does not address the complexity of different cryptocurrencies.

For others, the G20’s promise for crypto regulations is more symbolic. It represents global and political recognition of the crypto industry, in a very positive and optimistic tone. It’s a step forward in “legitimising crypto”, according to Twitter user @EDadoun. Perhaps we should all regard the Summit in this more positive light. It did bring crypto onto the world stage in a way that hasn’t been done before.

At this stage, all that can be done is to wait and see if the G20 will truly “step up [their] efforts” as the 2018 declaration proposed. And with Bitcoin becoming increasingly popular across the globe, it’s a great start that crypto has been spotlighted by the G20.

The Unity of the FATF and the G20 Summit

Whether the crypto regulations will come into practice or not, what cannot be ignored is the cooperation between The Financial Action Task Force (FATF) and the G20. The G20 has declared to implement crypto regulations in line with the FATF standards, in a relatively new cooperation between the two bodies.

“We will regulate crypto-assets for anti-money laundering and countering the
financing of terrorism in line with FATF standards and we will consider other responses as needed.”

Images of world leaders at the G20 summit with a green background
A press conference at the 2018 G20 Summit in Buenos Aires, Argentina.

FATF President Santiago Otamendi stated that the Task Force “needs to develop a constructive dialogue with the [fintech] industry” and it seems that crypto regulation is on the forefront of their agenda. And it seems this will be done with the best intentions. The Task Force openly acknowledge the benefits of blockchain technology, distributed ledgers and crypto, and appear to only want to protect these very offerings. As outlined in the FATF G20 Report:

“Technological innovations, including those underlying virtual assets like
blockchain and other distributed ledger technologies, may deliver significant
benefits to the financial system and the broader economy. However, virtual assets also pose serious money laundering and terrorist financing risks that criminals, money launderers, terrorists, and other illicit actors exploit.”

And now, we wait. Only time will tell if these regulations come into effect and change the crypto community for the better. In the end, the process of regulating decentralised, anonymous and open source currencies is no easy feat.

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