Preface by Silke Brand | The G7 nations Germany, France, Great Britain, Italy, Japan, Canada and USA, the European Union as well as the finance ministers and central bank governors of the G20 nations are said to look into possible regulations for Defi assets and derivatives in underlying blockchain technologies. Kyodo News, Japans leading news agency outlines the upcoming plans below.
The Group of Seven major industrialized democracies will promote tougher regulations of the cryptocurrency sector, aiming to increase business transparency and consumer protections, officials with knowledge of the plan said Sunday.
Discussion on crypto regulation ahead of G7 summit
The G-7 will accelerate the pace of related discussions toward a meeting of finance ministers and central bankers in mid-May, just days before Japanese Prime Minister Fumio Kishida hosts this year’s summit in Hiroshima, according to the officials.
Amid lingering concern about potential risks to the global financial system posed by crypto assets, they said Japan and the other members — Britain, Canada, France, Germany, Italy and the United States, as well as the European Union — are seeking to state their collective efforts in a leaders’ declaration.
The plan follows the collapse of the major cryptocurrency exchange FTX in November, which has laid bare the poor governance of the industry and sent shockwaves through financial markets.
It also comes as investors have been rattled by two sudden bank failures this month in the United States. The two were Silicon Valley Bank, which specialized in dealing with technology startups, and Signature Bank, which served crypto clients.
These developments have sent ripples across the globe. It has left lawmakers and policymakers scrambling to better regulate this volatile industry.
Of the G-7 members, Japan already has cryptocurrency regulations. Canada and the United States currently apply existing financial regulations.
While the legal status of virtual assets and rules about them vary by country, the group is hoping to take the lead in formulating global standards.
Internationally, the Financial Stability Board, headquartered in Switzerland, released a set of recommendations in October last year toward creating a regulatory framework, in which it said crypto assets should also be subject to regulations for commercial bank activities.
While the FSB plans to announce its final version of the framework in July this year, the International Monetary Fund released a policy paper in February outlining key elements to be considered by each country in the development of comprehensive and coordinated rules following the spread of crypto.
Among other guidelines, IMF directors have generally agreed that crypto assets should not be granted official currency or legal tender status.
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 major economies in Washington in mid-April, according to the officials, who spoke on condition of anonymity.