Image via G20.org.
Japan has been a leader in regulating cryptocurrencies in what has otherwise been a “wild west” period of its growth, now it’s trying to bring other countries up to its standard.
When G20 finance leaders meet next week, Japan will urge its counterparts to improve its anti-money laundering (AML) efforts for cryptocurrencies instead of trying to regulate trading, a government official “with direct knowledge of the matter” told
Reuters.
29 Finance ministers, 20 central bank governors and 10 heads of international organizations of the Group of 20 major economies are meeting in Buenos Aires, Argentina on March 19th – 20th to address key issues related to global finance, including cryptocurrencies. Leading the charge is the Financial Action Task Force (FATF), a 37-nation group based out of Paris created by the G7 industrial powers to tackle illicit finance. The team will be giving its report to the G20 on ways to keep cryptocurrencies from being used for money laundering.
Much of this laundering finds its way through loopholes in countries with loose or no regulations over crypto trading. However, Japan was the first country to implement a national regulatory system to oversee cryptos. A month ago, Japan’s Financial Services Agency (FSA) announced that it was inspecting 15 crypto exchanges after the
Coincheck hacklost $530 million (USD) of investor money.
Exchanges in Japan reported
669 suspected AML cases had taken place in 2017. In comparison, Japanese banks reported more than 347,000 suspected money laundering cases during that time.
Image via G20.org.
Policymakers have noted that there is a consensus among G20 nations that action needs to be taken, but leaders aren’t on the same page as to how to put this into action. “The general feeling among the G20 members is that applying too stringent regulations won’t be good,” the official said in the Reuters interview, stressing that regulations would need to prevent illicit activity and protect consumers without stifling innovation.
France and Germany will make a joint proposal to regulate the Bitcoin market at the summit. French Finance Minister Bruno Le Maire, German Finance Minister Peter Altmaier, with the heads of their respective central banks, had called for this discussion and all expressed concerns about the risk of cryptocurrencies for investors. U.S. Treasury Secretary Steven Mnuchin has stated that he would also bring up cryptocurrency regulation strategies at an upcoming G20 meeting. He has been vocal with his criticism of cryptocurrencies and
told the World Economic Forum in January 2018 that he wants to see all Bitcoin wallets around the world subject to the same regulation as a bank in the U.S. The head of the European Union’s watchdog proposed a short-term strategy to focus on applying AML and terrorist financing rules to warn consumers of the risks of trading cryptocurrencies but to also prevent banks from holding them.
This meeting of the minds comes at the perfect time. Three cryptocurrency exchanges based out of South Korea are
under investigation for illicit operations. Speaking with a source under the condition of anonymity, it was revealed that one of those exchanges is one of South Korea’s “big three” trading platforms - Bithumb, Korbit, or UpBit.
Several employees of the three exchanges are accused to have moved user funds illegally to invest in their personal crypto accounts over the past few months, according to local police, though they wouldn’t say how much money was moved. South Korea’s Financial Services Commission (FSC), along with the South Seoul Prosecutor’s Office, it’s financial investigation team, and financial authorities have carried out raids with court-ordered search warrants in-hand.
Meanwhile, Thailand has been quietly working to draft its own legislation governing digital currencies.
The Bangkok Post reports that two pending royal decrees are moving forward with plans to collect a capital gains tax of up to 15% on “digital asset” profits (cryptocurrencies, digital tokens and other assets in the form of electronic data). Anyone involved in conducting business with digital assets must be registered with relevant authorities. These decrees are heading to the Council of State for approval, followed by a vote from cabinet.
The Bangkok Post also reported that last month, the Central Bank of Thailand stopped financial institutions from interacting with cryptocurrency exchanges or initial coin offerings (ICOs) until these regulations had come into effect. The Thai Digital Asset Exchange (TDAX) postponed any ICO registrations until these regulations are approved.
AS for what this unified regulation will look like on a global scale remains uncertain, so far. As banks, exchanges, and countries work to make cryptos more accessible to the average investor, a country that lays the foundation for regulation will become an undisputed leader in this space, as other nations follow the trend.