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bitcoin’s big rally has been time and to the fact that the (FSB), a major international regulatory body, delivered to the G20 finance ministers and central bank governors declaring that does not post a “systemic risk.” The overall market sentiment seems to be that the FSB’s declaration serves as a positive signal for the currency, providing a basis for the $1,000+ rally in bitcoin’s value arising just as the in Buenos Aires.
However, if this was the spark for the bitcoin rally, traders are almost certainly reading (way) too much into the FSB’s comments – a trend apparently continuing in the aftermath of comments from G20 participants that cryptocurrency discussions were “productive” .
First, the FSB is only repeating views other regulators and agencies have made for years. As early as January 2016, the (IMF) that virtual currencies “do not pose systemic risks to financial stability, owing to their small scale and limited linkages to the financial system.” Similarly, US regulators have collectively via the Dodd-Frank mandated Financial Stability Oversight Council that virtual currencies are used only by a “very small” number of consumers and said their impact on financial stability at present is “likely limited.” Even at times the skeptical Bank of England has that digital currencies could only pose a risk “if a digital currency attained systemic status as a payment system.” But the general implication has always been, “but we’re not there yet.”
Second, the real action in the letter was in what the FSB, which is responsible for coordinating international regulatory action, was intending to do. Indeed, the letter was as much a foreshadowing of future regulation as it was anything else:
“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. […]
Relevant national authorities have begun to address these issues. Given the global nature of these markets, further international coordination is warranted, supported by international organisations such as CPMI, FATF and IOSCO.”
These comments do not represent a détente in cryptocurrency regulation. Instead, the FSB is signaling that some of the efforts taken to combat fraud in the United States and elsewhere will be implemented on an increasingly international dimension. Expect more coordination in antifraud enforcement from the (IOSCO), the international securities body, with the US Securities and Exchange Commission taking the lead. Meanwhile, don’t be surprised to see finance ministries and treasury departments advancing new security safeguards via the (FATF), the international forum for combatting anti-money laundering and terrorism financing, as well as central bankers raising global standards for clearing and settlement operations at the (CPMI).
The fact that the FSB was delivering the note to the G20 was in part a procedural step tied to facilitating the G20 summit, which included discussions on a range of . But make no mistake, international regulatory work streams are already very much gearing up, a fact highlighted by the concerns of many of G20’s members on the meeting — and the jury is out as to what impact the enhanced scrutiny will ultimately have on cryptocurrency prices and the future shape of the market.
The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.
Chris Brummer is a Professor of Law at Georgetown University Law Center and Director of the school’s Institute of International Economic Law.
Published at Tue, 20 Mar 2018 18:28:27 +0000
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