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The World’s Most Powerful Governments Push for Tighter Crypto Regulations

2 mins
Updated by Ryan James
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In Brief

  • Leaders from the seven wealthiest countries will convene to draft urgent legislation after the recent collapses in the crypto and banking industries.
  • The legislation was first called for after the collapse of the TerraUSD stablecoin in May last year.
  • The G-7 leaders have asked the Financial Accounting Standards Board to liaise with the Financial Action Task Force to implement the Travel Rule.
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Leaders of the G-7 countries release a joint statement on global cryptocurrency regulations amid growing concerns over the asset class’s threats to global financial stability.

The leaders of Britain, Japan, Canada, Germany, France, the United States, and the European Union see it necessary to release a joint statement after the collapse of FTX and several U.S. banks.

G-7 Meeting to Focus on Consumer Protection

The leaders will support stricter regulations for customer protection and greater transparency for crypto businesses. They plan to advance regulations before a finance ministers’ and central bankers’ meeting in Japan later this year.

The G-7 first signaled its intention in an announcement in May last year, and a document released last year proposed new rules after the collapse of the TerraUSD stablecoin in early May.

Of the seven most powerful nations, Japan has crypto regulations. The EU’s Markets-in-Crypto-Assets bill is expected to enter the debate on April 18, 2023. 

The law would introduce laws around disclosures by firms offering tokens to raise capital and introduce registration requirements, and will also introduce regulation surrounding stablecoins, a crypto asset whose value is pegged to a single fiat currency unit.

The United States has several bills awaiting passage through Congress. This waiting comes as the securities watchdog has brought enforcement actions on companies or products they allege violated securities laws.

What crypto industry players see as a lack of commitment to creating clear guidelines for crypto businesses has seen many migrate away from the U.S. to Singapore, the U.K., Dubai, and the EU.

Leaders Ask FASB to Work on Travel Rule

The global nature of the G-7 leaders’ meeting means that they could impose rules on the international movement of crypto. The leaders work closely with the Financial Accounting Standards Board to address stability risks associated with crypto assets.

It urged the FASB last year top “to advance the swift development and implementation of consistent and comprehensive regulation of crypto-asset issuers and service providers, with a view to holding crypto-assets, including stablecoins, to the same standards as the rest of the financial system.” 

Also, the leaders called for greater action surrounding the so-called travel rule for crypto assets.

Recently, delegates at the Financial Action Task Force plenary in Paris decided to implement new standards around the Travel Rule. Evidently, these rules enforce the “transmission of originator and beneficiary information” for crypto.

These tougher enforcement standards followed the virtual asset regulation introduced in 2019. At the time, this law suggested a need to collect data about the source and destination of virtual asset transfers.

In a recent interview with BeInCrypto, Alice Nawfal, the Chief Operating Officer of Notabene, praised the EU’s approach. She said that the EU had displayed the most flexibility when drafting the compliance aspect of the Travel Rule.

“They were open and moved quickly,” she said.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...