Finance Ministers and Central Bank Governors (FMCBGs) of G20 nations under India’s Presidency have adopted the roadmap for crypto regulation as proposed by International Monetary Fund (IMF) and Financial Stability Board FSB).

The roadmap is not in favour of a blanket ban on crypto-assets, while it vouches for a comprehensive regulatory and supervisory oversight as a better option.

The fourth and final meeting of the FMCBGs under the Indian Presidency held during October 12-13 in Marrakesh, Morocco on the sidelines of the IMF/WB Annual Meetings. The meeting unanimously adopted the G20 Finance Ministers and Central Bank Governors Communique, per a statement issued by Finance Ministry said.

G20 Roadmap on Crypto Assets

While adopting the roadmap proposed in the Synthesis Paper as a G20 Roadmap on Crypto Assets, the communique said, “Detailed and action-oriented roadmap is essential to achieve our common goals of macro-economic and financial stability and to ensure effective, flexible, and coordinated implementation of the comprehensive policy framework for crypto assets. We call for swift and coordinated implementation of the G20 Roadmap, including implementation of policy frameworks; outreach beyond G20 jurisdictions; global coordination, cooperation and information sharing; and addressing data gaps.”

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The statement also called for swift and coordinated implementation of the G20 Roadmap, including implementation of policy frameworks; outreach beyond G20 jurisdictions; global coordination, cooperation and information sharing; and addressing data gaps.

“We ask the IMF and FSB to provide regular and structured updates on the progress of implementation of the G20 Roadmap on Crypto Assets. We support the ongoing work and global implementation of FATF standards on crypto-assets,” it added.

Checks on misuse of cryptos

The synthesis paper has advocated for comprehensive regulatory and supervisory oversight of crypto-assets, as opposed to a blanket ban to address macroeconomic and financial stability risks.

It also pitched for using norms for money laundering to check the use of crypto assets for criminal and terrorist misuse. To address risks to financial integrity and mitigate criminal and terrorist misuse of the crypto-assets, the paper said that jurisdictions should implement the Financial Action Task Force (FATF) anti-money laundering and counter-terrorist financing (AML/CFT) standards that apply to virtual assets (VAs) and virtual asset service providers (VASPs).

“Jurisdictions should identify and assess the money laundering and terrorist financing (ML/TF) risks associated with VAs and take appropriate steps to manage and mitigate those risks,” it said.

Need for additional measures

The paper has called for additional steps to be taken up by some jurisdictions, in particular emerging economies to address specific risks. These jurisdictions may want to adapt these targeted measures to their country-specific circumstances, especially if they face elevated macro-financial risks from crypto-assets.

Jurisdictional characteristics that may determine vulnerabilities to macro-financial risks of crypto-assets include size of the economy and financial system, regulatory priorities, institutional quality and capacity, and level of financial integration into the global economy.

“The implementation of these measures may vary across countries based on their unique circumstances and capacity constraints,” the paper said.

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Crypto-assets have been in existence for more than a decade and have displayed significant volatility. Emerging in January 2009, shortly after the global financial crisis, the value of crypto-assets has fluctuated dramatically with many episodes of sharp appreciation and subsequent steep price reversions.

For instance, in 2021, the total market value of crypto-assets grew 3.5 fold, while the value of crypto-asset market shrank from a peak of $2.6 trillion to below $1 trillion during a turmoil that began in May 2022.

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