By Hannah Parker
To govern the asset class more effectively, the G20 nations intend to develop a convention on policy guidelines for cryptocurrencies.
According to a story published by Reuters, the G20 nations will research the effects of cryptocurrencies on the economy, monetary policy, and the banking industry to formulate a regulation consensus in December 2022, according to India’s Federal Economic Affairs Secretary Ajay Seth. He further mentioned that the policy viewpoint adopted should inform the regulation. Helping nations agree on a policy approach to crypto assets has been listed as among the priorities.
The European Union and 19 other nations comprise the G20, also known as the Group of Twenty. It strives to address critical global economic concerns like international financial stability, reducing greenhouse gas emissions, and sustainable development.
The first gathering of the G20’s finance and central bank deputy leaders occurred in Bengaluru from December 13–15, 2022, while India currently holds the G20 chair. A policy consensus could assist various jurisdictions in creating a legal framework in agreement with their peers because the crypto business is mainly uncontrolled. This resulted in many EU nations deciding to adopt or plan to adopt some sort of regulation towards cryptocurrency.
Significantly, the focus on cryptocurrency regulation has increased with the historic failure of FTX, once the third-largest cryptocurrency exchange, which caused billions of dollars in losses to retail customers.
According to reports, Sam Bankman-Fried, the infamous exchange’s founder, was detained by The Bahamas government during December 2022, due to “receiving notification from the United States that stipulated that it has filed charges against SBF and is highly likely to request his extradition.”
SBF has been charged criminally with eight offences by the Southern District of New York, including conspiracy to commit wire fraud and misappropriation of customer cash. Separately, SBF was accused of “orchestrating a conspiracy to defraud equity investors in FTX” by the Securities and Exchange Commission.
India’s Desires for a Worldwide Collaboration of Crypto Regulation
The Finance Minister of India, Nirmala Sitharaman, asserted that any regulation or ban would only be successful with international cooperation. In July 2022, Sitharaman claimed that because the government or central bank must issue every fiat money, the Reserve Bank of India (RBI) does not consider cryptocurrencies to be currencies.
“Since cryptocurrencies are by nature borderless, international cooperation is necessary to prevent regulatory arbitrage. Therefore, any legislation for regulation or banning can only be effective after substantial international collaboration on assessing the risks and advantages and developing a common taxonomy and criteria,” she noted at the time.
India’s government published its cryptocurrency tax plans earlier in 2022, which included a suggestion to tax earnings from cryptocurrency transactions at a 30% rate. Additionally, each purchaser of virtual digital assets will be required to make a 1% tax source payment (TDS).
What Crypto Regulation Will Do
The cryptocurrency market has developed over the past several years from a financial sideshow that was mostly mocked by mainstream investment markets to one of the world’s most significant and fiercely debated asset classes.
Cryptocurrencies have promised to facilitate a new type of financial platform free from the intervention of governments or vested interests because they are decentralised assets that are not directly under the oversight or control of any single body.
To regulate or exert control over the cryptocurrency market, various jurisdictions have adopted various strategies. These strategies range from punitive taxes and strict anti-money laundering controls to more accommodative strategies that encourage the sector to innovate.
To begin with, increased regulation may result in more stability in the famously unstable crypto market. Tally Greenberg, the Head of Business Development at Allnodes, a platform that offers hosting, monitoring, and staking services, asserts that regulations “will come up, and they have to come up at some point, which will stabilise the market even further.” This safeguards investors, which is good.
In an interview with crypto experts at Bitcoineer Official, the significance of tools like Tether in streamlining trades, and any legal limitations placed on stablecoins, which include regulating them similarly to banks, would significantly affect the market across the board.
Additionally, distinctions between fully decentralised assets like Bitcoin and Ethereum, which account for most of the market value, and other crypto assets like Non-Fungible Tokens (NFTs) and other DeFi projects are likely to be established.
The SEC has previously argued that while Bitcoin and Ethereum are not controlled by any one entity and may therefore be subject to different regulations, many DeFi projects, such as initial coin offerings, bear strong similarities to securities and, as such, would be governed by the same regulations as publicly traded companies.
Given that these allow retail traders to take on significant leverage without the backstops that traditional stock exchanges have to offer, which sometimes materialise as warnings for investors, government oversight of the cryptocurrency derivatives market is also likely to be a critical component of any rules developed to protect investors.
For the first time, the EU has established a legal framework for crypto assets, issuers, and service providers. The markets in crypto-assets (MiCA) proposal, which encompasses issuers of unsupportable crypto-assets and so-called “stablecoins,” as well as trading platforms and wallets where crypto-assets are stored, has reached a preliminary agreement between the Council presidency and the European Parliament. This regulatory framework will safeguard investors, maintain financial stability, and stimulate innovation while enhancing the appeal of the crypto-asset market. Since several EU members currently have national laws governing crypto-assets, there has yet to be a clear regulatory framework at the EU level until now; this will increase clarity inside the EU. Regulation in cryptocurrencies is increasingly growing worldwide, creating a more extensive safeguard for investors and coins.
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Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
