G7 Plans to Promote Tougher Regulations for Cryptocurrency

The Group of Seven (G7) major industrialized democracies are reportedly planning to promote tougher regulations of the cryptocurrency sector during the 49th G7 summit which is scheduled for May 2023 and will take place in Hiroshima, Japan. The goal of the plan is to increase transparency and consumer protections, according to anonymous officials with knowledge of the plan, Kyodo News reported on March 26.

Seeks to increase transparency and consumer protections

The G7 countries are hoping to promote tighter regulations for the cryptocurrency sector as a means to increase transparency and consumer protections. According to anonymous officials familiar with the plan, the G7 aims to take the lead in setting global standards for virtual assets. These countries are concerned about the potential risks posed by crypto assets to the global financial system, especially after the collapse of FTX, a major cryptocurrency exchange in November, which exposed the poor governance of the industry and sent shockwaves through financial markets.

Mid-May meeting to accelerate discussions

To achieve their goal of setting global standards, the G7 plans to accelerate the pace of discussions on this issue leading up to a meeting of finance ministers and central bankers in mid-May. This meeting will take place just days before Japanese Prime Minister Fumio Kishida hosts this year’s G7 summit in Hiroshima. The leaders of Japan, Britain, Canada, France, Germany, Italy, the United States, and the European Union are hoping to state their collective efforts in a leaders’ declaration.

Establishing global standards for virtual assets

While the legal status of virtual assets and the rules surrounding them vary by country, the G7 is seeking to establish global standards for regulating virtual assets. The Financial Stability Board (FSB), which is headquartered in Switzerland, released recommendations in October last year for creating a regulatory framework. The FSB has stated that crypto assets should also be subject to regulations for commercial bank activities. The FSB is expected to announce the final version of the framework in July this year.

IMF guidelines for regulating crypto assets

The International Monetary Fund (IMF) has also provided guidelines for countries to consider when developing comprehensive and coordinated rules for regulating crypto assets. Among other guidelines, IMF directors have generally agreed that crypto assets should not be granted official currency or legal tender status.

G20 meeting to discuss crypto assets

The issues associated with crypto assets are also likely to be on the agenda of the upcoming meeting of finance ministers and central bank governors from the Group of 20 (G20) major economies in Washington in mid-April. According to the anonymous officials who spoke about the G7’s plan, these issues will be discussed on the condition of anonymity.

Conclusion

The G7 is reportedly planning to promote tighter regulations for the cryptocurrency sector during the 49th G7 summit scheduled for May 2023 in Hiroshima, Japan. The goal of the plan is to increase transparency and consumer protections, and to establish global standards for virtual assets. The G7 aims to take the lead in setting these standards, and the FSB and IMF have already released recommendations and guidelines for regulating crypto assets. The upcoming meeting of finance ministers and central bank governors from the G20 major economies in Washington is also expected to discuss the issues associated with crypto assets.

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