Crypto was on the agenda at the G20 summit in New Delhi over the weekend as world leaders look for ways to rein in the sector.
The Financial Stability Board – the G20 risk-monitoring body – and the IMF had put forward a plan for how to stop cryptoassets undermining the world’s financial stability. They said that many of crypto’s vaunted benefits – from improved payment systems and financial inclusion – have not materialised, echoing a point raised by the Bank for International Settlements last month.
The FSB and IMF also said that the risks to financial stability have been made worse by some instances of “non-compliance with existing laws” and that fraud and manipulation were “prevalent” in cryptoasset markets.
The IMF and FSB also recommended that countries should co-operate and share information as they regulate cryptoassets, rather than make crypto activities illegal – which could be difficult to enforce.
The G20 agreed to back the FSB’s recommendations for crypto regulation. Finance ministers and central governors will then discuss their plans for crypto regulations at a meeting in October.
(For more Reuters G20 coverage, check out what else the leaders agreed on and why the summit was mostly disappointing.)
In other regulatory news, last week saw the global securities watchdog set out its plan to make DeFi participants accountable for what goes on there. It’s tricky, because there’s not much standardised data about DeFi and people in the market use multiple pseudonymous addresses to hide their activity, the regulator said. Important context: the DeFi market has shrunk to about $40 billion, down from its $170 billion at its peak in November 2021, according to CoinGecko data.
Meanwhile, the UK’s new rules about how crypto can be marketed are due to come into force in early October, but the financial regulator said that companies can ask for more time to comply. The Financial Conduct Authority’s director of consumer investments, Lucy Castledine, said that the FCA is “concerned” by many overseas and unregulated crypto firms failing to engage with it on the new rules.
The past week has also seen some updates on countries’ central bank digital currency plans. The Federal Reserve’s top regulatory official said that the Fed is a “long way” from any decision on whether it would issue its own digital currency, while Israel’s central bank governor said it was still an “open question” whether it would issue one.
Six sources said India’s central bank is planning more features for its digital currency (such as offline spending and linking it to an existing payment system) to get more people to use it. The digital currency is averaging 18,000 retail transactions per day, far below the central bank’s one million per day target for the end of 2023.
Meanwhile in Europe, the European Union’s financial services chief, Mairead McGuinness, said that the draft law for a digital euro should not be rushed out ahead of European elections next June, but instead should be examined “quietly and slowly” after that. McGuinness said that the idea behind a digital euro is that, if cash becomes diminished in future, then people still need to have a form of “central bank public money”.
