Friday, December 9, 2022

G20’s Financial Regulator Rebuffs Countries’ Calls for Crypto Controls

G20’s Financial Regulator Rebuffs Countries’ Calls for Crypto Controls

In a surprise move, The G20 group’s financial regulator the Financial Stability Board (FSB) has rejected member countries’ requests for tighter controls on cryptocurrency trading — for now. FSB president Mark Carney said in a letter to finance ministers that “currently, these crypto-assets do not pose a risk to global financial security.”

Also see: Red Sunday: Top 10 Crypto Projects by Market Cap Getting Walloped

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Formed in 1999, the G20 is a body representing the governments and central banks of the world’s 20 largest economies. Though it’s a talking shop for all manner of issues, it has historically focused on international financial stability. Its next meeting of members’ finance ministers will take place in Buenos Aires, Argentina, on March 19-20th.

Its member countries and other international financial bodies, including the Bank of International Settlements (BIS), have spent the past few months leading up to the meeting warning of the risks new digital assets pose, and calling for stricter regulation.

G20: Crypto Market Share Too Small to Worry About – Yet

While the news will be welcomed by the cryptocurrency industry, it’s important to note the FSB sees cryptocurrencies as non-threatening mostly due to their small market share. Carney’s letter also said the G20 should coordinate efforts to monitor development of the technology, and mentioned they represent less than 1 percent of global GDP.

Were that share to grow into something more significant, it’s plausible the FSB would use its greater knowledge of cryptocurrency, blockchain and digital asset technology to control their use.

G20 leaders' meeting in Germany last year
G20 leaders’ meeting in Germany last year

If the FSB president’s name sounds familiar, it’s because Carney is also the governor of the Bank of England — both positions he will leave next year. It’s also the same Mark Carney who in February said bitcoin “has failed” at being a currency, and attracts “fools” as investors.

Neither Carney’s nor the FSB’s approach regards crypto-assets as a threat, yet neither has exactly welcomed their growth. Central bankers have for years regarded bitcoin and other crypto-assets with suspicion, regularly issuing warnings about price volatility and dropping ominous hints about their legality.

However Carney also wrote in his letter that the next FSB president would take a similar view, using the organization to review existing rules rather than writing new ones. The body is more concerned with the systematic risks that triggered the global financial crisis of the late 00s.

Is the FSB’s approach good news for bitcoin and cryptocurrencies, or neutral? Let’s hear your thoughts in the comments.

Images via Bank of England/Flickr

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