Authorities preparing recommendations on crypto regulations
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Loading... - Gozar Makisig
- 18 May 2023
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High-level proposals regarding the regulation of cryptocurrencies are slated to be presented during the upcoming G20 meeting in July. This initiative, as emphasized by Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla, is crucial in addressing various concerns, including the cross-border transfer of funds.
Following the 23rd Financial Stability Board Regional Consultative Group for Asia (FSB-RCGA), FSB Chairman and De Nederlandsche Bank President, Dr. Klaas Knot, provided insights on the G20's directive to the FSB to establish a global regulatory framework for crypto asset activities. Currently, the FSB is actively developing recommendations pertaining to stablecoins and other crypto asset operations.
Dr. Knot acknowledged that the forthcoming meeting will feature these high-level proposals. However, he emphasized that they are intended to serve as broad guidelines, as the name suggests. Crypto currencies, being digital assets or virtual currencies, remain largely unregulated globally. Nonetheless, they have gained significant traction among investors due to their applications in remittances, payments, investments, fundraising, and exchanges.
Bangko Sentral ng Pilipinas (BSP) already mandates that providers of virtual currencies (VC) register with the central bank, particularly given their use in remittances and by transfer companies. Currently, there are seven entities that have been granted provisional licenses for virtual currency exchanges.
Dr. Knot explained that the FSB's standard-setting bodies, encompassing banking, insurance, securities regulations, and others, must adopt these recommendations and translate them into detailed guidelines applicable to specific entities. These bodies have already begun this process in parallel, acknowledging the urgent pace at which the industry is evolving. Expediency is crucial in order to align with the rapid developments and advancements within the sector.
Dr. Knot mentioned that certain countries are now preparing to establish their own standards for this asset class. However, the majority of jurisdictions are expected to develop legislation aimed at safeguarding investors between 2024 and 2025.
The regional consultations conducted aim to incorporate the perspectives of various stakeholders. This approach underscores the necessity for a truly global outlook on cryptocurrency regulation. Dr. Knot emphasized that promoting global financial stability requires universally implemented standards. As he stated, "Global financial stability is genuinely a public good that can only be achieved if the standards we set for ourselves are implemented globally."
During the same briefing, Governor Medalla stressed that regulations become stricter when crypto intersects with the banking sector. This stringency is necessary because cross-border transactions in cryptocurrencies have the potential to finance activities that are inherently detrimental.
