The Financial Stability Board (FSB) stated yesterday that cryptocurrencies are currently not a threat to the mainstream global banking system.
The announcement came during the G20 gathering that is being held this week in Buenos Aires, Argentina, where finance ministers have been predominantly addressing the future of work, infrastructure and the world economy – including the scope for more regulations on Bitcoin and other cryptocurrencies. It was reported by Reuters that in a letter from Mark Carney, the chairman of the FSB, the G20 ministers were informed that ‘Crypto-assets do not pose risks to global financial stability at this time’. This comes as a blow for a number of countries who were calling to impose updated global regulations upon the heavily un-regulated and criticised digital markets.
Carney, who is also Governor of the Bank of England, has recently played a vocal role in face of the rise of cryptocurrencies and gave predictions of the future of digital payments. The FSB, of which Carney is chairman, plays a major role in the stability of international markets and is acclaimed as ‘co-ordinating national financial authorities and international standard-setting bodies as they work towards strong regulatory, supervisory and other financial sector policies’. The board, established in 2009 in the wake of the market crash, has major scope across all financial sectors meaning that these recent comments towards the ministers have served as a triumph for the cryptosphere.
The statement by Carney however does invoke the suggestion that although the cryptocurrencies have a green light for now, that the FSB will continue to monitor the markets: ‘Crypto-assets raise a host of issues around consumer and investor protection, as well as their use to shield illicit activity and for money laundering and terrorist financing. At the same time, the technologies underlying them have the potential to improve the efficiency and inclusiveness of
both the financial system and the economy’.
The news also comes amidst a tumultuous setting at the G20 summit, as the finance ministers and leading bankers look for a collective strategy in the face of currency news. It was reported that during the summit, French minister Bruno Le Maire suggested that ‘if we want to move on and protect citizens from any kind of speculations or money laundering or terrorism financing, we need rules’, pressing for a deeper element of regulation on both standard currencies and the cryptosphere. Ministers argued that so far very few individuals are reporting their cryptocurrency gains to Inland Revenue Tax, when they could, in fact, be subject to capital gains tax. More meetings are proposed for later on today to further discuss digital implications.
The heightened debate surrounding the regulations of Bitcoin and other cryptocurrencies has played a predominant role in the market recently, even before the summit, as fears surrounding their unregulated nature can be tied to a network for money laundering and criminal activity. Some of the cryptocurrency exchanges such as the Winklevii creation, Gemini, have also further acknowledged that regulation is an inevitable facet of the currencies and could in fact be one of the only lifelines that can bring cryptocurrencies into the mainstream markets. Today’s meetings will continue to push for the aim of curtailing the very deregulated nature of the digital world and bridge the gap between government regulators and their crypto-counterparts.
With countries continuing to push for more action in the financial realm, this week’s meetings will leave space for much further discussion regarding the influences of cryptocurrencies. Carney’s comments at least make it unlikely that any pressing regulations will result from the G20 organisation this week. Though somewhat of a silver lining in the otherwise stormy digital markets, this is just the start of the ongoing battle to curb the digital sphere.