Tomorrow will be a huge day for cryptocurrency, it has the potential to be a key turning point in the growth of cryptocurrency and can possibly go down as a historic day for the space. The powerful G20 summit will be holding talks about cryptocurrency on March 19 & 20.
The first meeting will take place Monday. The talks will feature Argentina Treasury Minister Nicolás Dujovne and Organisation for Economic Co-operation and Development (OECD) Secretary-General José Angel Gurría, among other stakeholders.
A second discussion will happen on Tuesday.
The agenda and talking points for the two discussions have not been specified. However, according to official documents the discussions will revolve around the implications of cryptocurrencies and the potential applications of its underlying technology.
The issue is an important item on the meeting agenda; delegates will consider a common response that would mitigate the risks without discouraging innovation. Blockchain technology has the potential to promote financial inclusion. However it is important to analyze its implications to financial stability, tax evasion and financial illegal activities.
Steven Mnuchin the U.S. Treasury Secretary said his concerns revolve around the use of cryptocurrencies in illegal activities like money laundering.
The general feeling among the G20 members is that applying too stringent regulations won’t be good.
The discussions taking place will be positive for blockchain technology and the cryptocurrency market. As stated many countries view the potential of the technology and recognize it to be revolutionary. The G20 will only be meeting to talk about imposing some regulations to protect investors and get rid of the many illegal activities going on in the cryptocurrency market. We are still in the wild west of the cryptocurrency world. This regulations need to take place in order for the space to mature and gain mainstream adoption, which will help the market reach new levels never seen before.
What is the G20?
The G20 is an international forum for the governments and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Republic of Korea, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.
Founded in 1999, the G20 aims to discuss policy pertaining to the promotion of international financial stability. It seeks to address issues that go beyond the responsibilities of any one organization.
Current country regulations
Argentina
Argentina is hosting the G20 meeting and interestingly is one of the fastest nations to adopt Bitcoin. Currently the Argentinian regulators have taken a hands off approach and encouraged innovation. Indeed, Argentina’s biggest futures market has plans to offer Bitcoin futures.
Current status: No government regulation
Australia
Australia has no specific, wide ranging regulations but is investigating the most suitable approach. However, the Australian Transaction and Analysis Centre (AUSTRAC) has recently updated its AML laws to require greater transparency and recording of cryptocurrencies. Through the implementation of a new Digital Currency Exchange registry, exchanges dealing with digital currencies will be required to disclose specific details of all transactions made on its platforms.
Current status: No overarching government regulation but focus on creating greater transparency re AML and digital currency exchanges.
Brazil
Brazil appears to have taken an initial hardline, banning investments in cryptocurrencies whilst attempting to work out the correct approach to wider regulation.
Current status: Financial assets not recognized, direct investment prohibited
Canada
Canada is another country that is positioning itself as a hub of blockchain innovation. Miners have flooded into Canada and the Central Bank of Canada is even considering the possibility of launching a state backed cryptocurrency. However, they remain vigilant about regulating illegal activities.
Current status: Cryptocurrency earnings liable for taxation
China
China has an interesting relationships with blockchain and cryptocurrencies. On the one hand it’s a hub of innovation, yet on the other hand it is one of the most strictly regulated and controlled markets. It will be very interesting to see the long term play from China unfolds.
Current status: Coin trading is prohibited and ICOs are prohibited
European Union
Currently, regulation is being discussed by individual member states on a country by country basis, but EU regulators have met to discuss the possibility of coordinating regulatory efforts across the European Union.
Current status: Agreed to more stringent rules to prevent money laundering and terrorist financing in Bitcoin and other virtual currency exchanges
France
France joined Germany in calling for international cooperation on crypto regulation. They have also developed a working group for cryptocurrency regulation with a particular focus on fighting tax evasion.
Current status: So far no regulation, but warnings about regulatory readiness (not disclosed in detail), and risk of speculation and manipulation.
Germany
Germany (along with France) are one of the key members pushing for crypto regulatory discussions at the G20 meeting. They appear to have a desire to help position Europe as a leading hub of blockchain and crypto development, but believe that regulation will have to be a coordinate international effort.
Current status: It is a legitimate financial instrument and may be taxable, but requires additional licenses and permits.
IndiaIndia is another country that has taken a rather negative view of cryptocurrencies, now going as far as suggesting that cryptocurrencies should be banned as they are potentially too hard to regulate. However, there is a lot of innovation in the space in India and the recent successful fundraise by Zebi and the partnership they have secured with state government shows that there is currently room to manoeuvre.
Current status: Not accepted as a means of payment, regulation of money laundering and illegal activities
Indonesia
Indonesia’s central bank has issued a fresh warning about trading in cryptocurrencies like Bitcoin, because of the risk of losses to the public and even a potential threat to the stability of the financial system. However, there is currently no formal regulation, although it is prohibited
Current status: No government regulation, but there is a ban on financial technology companies using cryptocurrencies for transactions
Italy
The Italian Ministry of Economics is working on a decree that aims to classify the use of cryptocurrencies in the country and to list service providers related to digital currencies. However, they have also noted that some central banks have / are considering launching cryptocurrencies.
Current status: No government regulation
Japan:
In 2017 Japan recognised Bitcoin as legal tender, and is a country generally regarded as taking a leading position in the development of blockchain and crypto technology and regulation. As noted above they are keen to guard against the negative and criminal elements such as money laundering.
Current status: liable for taxation, payment instrument recognition
Mexico
Mexican lawmakers have passed a cryptocurrency regulation bill. The framework states that cryptocurrencies are not legal tender and that cryptocurrencies such as Bitcoin should be considered a commodity, not a currency. In addition, the bill also seeks to put the operation of cryptocurrency exchanges under oversight of the country’s central bank.
Current status: Bill passed stating cryptocurrencies are not legal tender and should be treated as commodities and related taxes. Central bank oversight of exchanges.
Russia
Russia is finalising federal law surrounding cryptocurrencies and ICOs and is taking a view that regulation is the answer, rather than an outright ban. The law covers regulation of the creation, issuance, storage, and circulation of cryptocurrencies.
Current status: Cryptocurrency and ICO regulation legislation in place, restrictions on ICO investments and advertising, room for regulated exchanges.
Saudi Arabia
Saudi Arabia is taking a fairly relaxed view on cryptocurrency regulation, suggesting that they are working on regulation but that an outright ban is highly unlikely. In fact, Saudi Arabia and Dubai are working on a pilot program to test how a new digital currency could be used to facilitate cross-border payments suggesting a positive approach to the potential of blockchain and cryptocurrencies. Meanwhile a company owned by a member the Dubai Royal Family has just partnered with Jibrel Network on their jCash cryptocurrency showing further signs of top-down support in the Persian Gulf region.
Current status: Potential for some general regulations to be introduced, ban / prohibition unlikely
South Africa
South Africa is looking at regulating cryptocurrencies and the central bank even published a white paper on digital currencies as far back as 2014. Whilst currently looking into regulation, the use of cryptocurrencies in South Africa is currently “not illegal” and are subject to taxation law.
Current status: No government regulation but regulation is planned
South Korea
South Korea is a major market for cryptocurrencies, and in January accounted for up to 15% of Bitcoin trading. Due to major interest from their citizens, the government was compelled to act and initially clamped down on anonymous cryptocurrency trading. Anonymous trading is now banned but they are opening up regulations for KYC based trading and as noted previously they are are considering reintroducing ICOs under new, regulated conditions.
Current status: No anonymous account transactions (real name system), tax preparation in progress, potentially introducing ICO regulation.
Turkey
There is currently no government regulation. In fact, politicians in Turkey are reportedly looking to launch a national cryptocurrency. Ahmet Kenan Tanrikulu, the deputy chair of Turkey’s Nationalist Movement Party and the country’s former Industry Minister, has drafted a report to propose a state-backed cryptocurrency dubbed “Turkcoin.”
Current status: No government regulation
United Kingdom
So far the UK has taken a wait and see approach to cryptocurrency regulation. However, we have recently seen the governor of the Bank of England, Mark Carney, calling for a crack down. He noted that cryptocurrencies do not yet pose a risk to current financial systems, but essentially wants “to hold the crypto-asset ecosystem to the same standards as the rest of the financial system” to protect businesses and individuals and guard against illegal activities.
Current status: No government regulation
USA
The CFTC and SEC senate hearing on 7 February 2018 was largely received in a positive light with CFTC Chairman, Christopher Giancarlo appearing particularly supportive, and becoming somewhat of a cult hero in crypto Twitter circles. The market is still digesting the US House Capital Markets, Securities, and Investment Subcommittee hearing, although there is a sense that no major strides forward were made in the debate.
Current status: ICO prohibited, money laundering and illegal act regulations enacted, cryptographic exchange tradition license scheme in force