One of the hottest issues that the ongoing G20 meeting in Buenos Aires, Argentina discussed is Cryptocurrencies and Blockchain technology. A recent communique from the G20 that Cryptocurrencies can contribute to significant benefits in the world economy is a major boost to the novel industry. The meeting also identified that there is a lot to be done to help in preventing the use of Cryptocurrencies in money laundering.
G20 Confirms Cryptocurrency Benefits
A meeting between finance ministers and the Central Bank governors of the G20 member countries has said that Cryptocurrencies have great potential. The meeting identified that the virtual currencies and Blockchain can have major benefits in the financial system and the entire global economy. The report by the G20 is a major boost to the new industry that has been facing a lot of challenges as most countries lack the laws to regulate it.
G20 is composed of 20 most developed economies, namely the European Union, the United States, Russia, Saud Arabia, Argentina, Brazil, China, Germany, Indonesia, Japan, Mexico, Australia, Canada, France, India, Italy, South Korea, United Kingdom, and Turkey. This year’s meeting is taking place in Buenos Aires, Argentina.
It is no secret that the acceptance and use of Cryptocurrencies has been a major challenge in many regions. Many countries are yet to develop a legal framework to facilitate the functioning of this promising technology. Cryptocurrency and Blockchain technology have been associated with various benefits such as transparency, reduced transaction cost and time among others.
Since the emergence of Blockchain and Cryptocurrency a few years, the industry has experienced tremendous growth. Transactions worth billions of dollars are performed on the platform on a daily basis. This is despite the industry facing a lot of rejection from many governments as they see it as a threat to their control of the financial system.
The Need to Protect Investors
Despite the many benefits associated with Blockchain and Cryptocurrencies, it’s clear that volatility has been a major challenge in the sector. Many people have made a fortune from the fluctuating Cryptocurrency prices as others have suffered huge losses. The volatility has also been a major challenge in enabling the Cryptocurrencies to replace fiat money as the preferred payment method.
The G20 members identified the need to protect consumers from the volatility of the Cryptocurrencies. They also identified the potential use of the virtual currencies in tax evasion, money laundering, and other illegal activities like drug trafficking and financing terrorism. The finance ministers said there is a need to ensure the use of Cryptocurrencies in such activities is controlled.
G20 to Remain Vigilant
Given that Cryptocurrencies have not been around for long, the G20 also said it will remain active in the studying their long-term impact on the world economy. The group will also be monitoring new developments in the sector. The ministers released a report saying that although the Cryptocurrencies do not pose a risk to the global financial stability at the moment, they will remain vigilant.
G20 will continue relying on updates about Cryptocurrencies from the FSB and SSBs. They believe the two agencies will work towards establishing the potential risk of the virtual currencies. The ministers also said that they are determined to implement the FATF standards. In March, the G20 had vowed not to introduce regulations until the collection more data on the effect of the virtual currencies on the world economy. By October this year, the group hopes to have Cryptocurrency AML guidelines in place.