The recently concluded G20 summit was concluded by signing a joint declaration between all the participated countries, the declaration highlighted the importance of necessary reforms to place the digitalization of global economy at check. All the countries that participated in the summit placed their individual economic policies aside and abided to form a regulatory structure.
All the participated finance ministers, central bank governors and leaders of the countries pressed on the fact that international trade and investment are important engines of growth, productivity, innovation, job creation, and development They added that, in the face of global economic challenges, this is our moment to take action to address structural growth impediments, rebuild buffers, reduce excessive global imbalances, and mitigate risks
An agreement has been reached at the G20 summit and the regulations that are to be implemented will be in line with the Financial Action Task Force (FATF). Official declaration, section 25 reads,
We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed
It remains to be seen how these regulatory measures will be implemented because cryptocurrencies, such as bitcoin, were originally designed to make borderless transactions earier..
A derivative of digital currencies, Bitcoin can be called as the original coin. It was the first of its kind and was introduced in the year 2009. Cryptocurrencies can be used to buy or sell items from people and companies who accept them as payment, but they do not exist as a physical currency.
There are two major ways to earn Bitcoins: mining and trading/exchanging. Mining involves solving complex problems that can ear the user a reward. It is estimated that there are totally 21 million Bitcoins out there and only 4 million are still left to mine. A record of each transaction will be stored in a decentralized system called as blockchain.it is a public ledger connected by 256-bit encrypted codes. This ensures the safety of the system.
Financial Action Task Force (FATF)
The recently released regulation by FATF stated that virtual assets are totally different from the fiat currencies and are to be treated as assets only not currencies.
All the governments (G20) before formulating the framework required for regulating cryptocurrency should comply with the standards provided by FATF. This will help the authorities to track down any illegal activities also monitoring the entire operating will become an easy task. Governments also should have a fail-safe system that can be implemented at the time of emergency. Crypto regulations can be a risky process and if a step is misplaced then the chances of reaching a perfect regulation will be destroyed.