Soon a globally harmonized regulation for cryptocurrencies? That’s what the latest G20 statement co-authored by representatives of the world’s most important countries suggests.
Global regulation coming soon?
The fall of FTX, caused by its disastrous management of customer funds, is pushing countries around the world to take steps to ensure that such an event does not happen again.
👉 FTX: answers to all your questions about the case that shakes cryptocurrencies
Following the pronouncements of the US Securities and Exchange Commission (SEC), Japan’s Financial Services Agency and the Financial Stability Board (FSB), the G20 leaders recently met and discussed a future global regulatory framework regarding cryptocurrencies.
According to the G20 leaders’ statement, drafted in Bali on November 16, 2022:
“It is essential to raise awareness of risks, strengthen regulatory outcomes and support harmonization of existing rules, while leveraging the benefits of innovation.”
Recall that the G20 is a global economic governance forum, annually bringing together state and ministerial representatives of the world’s most powerful states.
As a result, FTX can be seen as the gas pedal of thoughts related to the regulation of the cryptocurrency sector.
The slow construction of regulation
Despite the goodwill of companies operating in the cryptocurrency sector, regulation cannot be built instantly. It can only be done following a democratization of the sector’s issues among political figures.
Moreover, as blockchain-related technologies evolve very quickly, regulation must be updated regularly to avoid legal obsolescence, without being voted on in haste.
Consequently, the proposals set out in the G20 document are only suggestions for countries developing their own regulations on the subject:
We welcome the ongoing work of the FSB and international bodies ensuring that the cryptocurrency ecosystem, including so-called stablecoins, is closely monitored and subject to robust regulation, supervision and oversight to mitigate risks to financial stability.
Today, each state applies its own legislation, not harmonized at the global level: in the heart of the European Union alone, it was only recently that a proposal for a regulation (MiCA) was passed to standardize the rules in force in the cryptocurrency sector.
But before regulating, a distinction would still have to be made between traditional and decentralized finance.