The G20 Countries have released a declaration in support of the regulation of the Crypto sector. The G20 forum brings together central bank governors and governments of the 20 largest economies in the world. In a joint statement, the countries said that they will regulate virtual currencies to control their use in terrorism financing and money laundering in line with FATF standards. Moreover, the countries said they will consider other responses where applicable.
How Regulation May Affect The Crypto Sector
The recent decision by G20 Countries to support te regulation of the Crypto sector in Buenos Aires, Argentina is expected to affect the industry. In the past, the countries have been reluctant to regulate the sector and instead maintained an open-minded stance towards the sector. Japan may have played a vital role in encouraging the member countries to go for regulation as it helps in creating a healthy environment for both established businesses and startups.
Over-regulation is known for restricting the growth of emerging technologies by limiting the way companies can use it in the long run. However, regulation can facilitate the growth of companies. In the case of Crypto regulations, exchanges have a good chance of succeeding given that they will now be able to access fiat currencies available in the current banking system.
Crypto Regulation Common Among G20 Countries
Various countries who are already members of the G20 have put in place Cryptocurrency regulations although in different levels. In South Korea, the government recently allowed financial institutions to work closely with Cryptocurrency trading platforms in the country. The government also permitted the banks to provide virtual bank accounts to Cryptocurrency exchanges.
However, some countries in the G20 do not have clear regulatory frameworks on Cryptocurrencies in place. India, Argentina, and Russia have a long way to go to ensure they have the right laws in place. The recent decision by G20 Countries is expected to encourage member states to follow suit.
In a joint statement, G20 countries said they will continue monitoring the Crypto sector closely to contain emerging vulnerabilities and risks in the industry. Furthermore, the countries will work together in regulating and supervising the sector. The increased role of G20 countries in the regulation of the Crypto sector is expected to eliminate the barriers that have hindered the compatibility of the traditional finance sector and Crypto.
Cryptocurrency Exchanges Could Become Popular Due To Regulation
More regulatory clarity in the Crypto market is expected to boost the participation of major financial institutions into the sector. G20 has already expressed its intention to help Crypto in the creation of a resilient financial system. The group has noted the need to support sustainable growth of the sector.
The gradual process of regulating the Crypto sector worldwide is expected to make exchanges compliant with regulations. This will allow for the launch of public investment vehicles such as exchange-traded fund (ETF) on these exchanges. According to Jay Clayton, the U.S. Securities and Exchange Commission (SEC) chairman, regulations would help in eliminating the risk of manipulation in the Crypto sector.