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G20 leaders call for swift implementation of crypto asset regulations

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(Kitco News) - The leaders of the 20 largest economies in the world, also known as G20, wrapped up their annual meeting in New Delhi, India, on Sunday with a promise to work toward creating a global economy that is strong, sustainable, balanced, and offers inclusive growth opportunities for all.

One of the primary ways the G20 is looking to have an impact on the global economy is through the creation of a cross-border framework for crypto assets.

“We call for the swift implementation of the Crypto-Asset Reporting Framework (CARF) and amendments to the CRS [Common Reporting Standard],” the joint declaration signed by G20 leaders said. “We ask the Global Forum on Transparency and Exchange of Information for Tax Purposes to identify an appropriate and coordinated timeline to commence exchanges by relevant jurisdictions.”

Under CARF, reporting tax information related to crypto asset transactions is standardized to automatically exchange a user's information with the jurisdiction where they reside as taxpayers. The goal of the framework is to make it so that investors can no longer conceal their crypto transactions.

Under the amended CRS, crypto-asset traders will be required to report all foreign bank accounts and assets held abroad to their local tax authorities.

The joint declaration noted that the G20 will continue to “closely monitor the risks of the fast-paced developments in the cryptoasset ecosystem,” and the leaders endorsed the Financial Stability Board’s (FSB’s) “high-level recommendations for the regulation, supervision and oversight of crypto-assets activities and markets and of global stablecoin arrangements.”

Prior to the annual meeting, the Indian G20 Presidency asked the International Monetary Fund (IMF) and Financial Stability Board (FSB) to create a policy roadmap capable of providing “comprehensive guidance to help authorities address the macroeconomic and financial stability risks posed by crypto-asset activities and markets, including those associated with stablecoins and those conducted through so-called decentralized finance (DeFi).”

The roadmap includes currently planned and ongoing work related to the implementation of the policy framework, which seeks to build institutional capacity beyond G20 jurisdictions; enhance global coordination cooperation and information sharing; and address data gaps necessary to understand the rapidly changing crypto asset ecosystem.

According to the report released by the IMF and FSB, the act of banning cryptocurrency won’t eliminate the risks involved, and “comprehensive regulatory and supervisory oversight of crypto-assets should be a baseline to address macroeconomic and financial stability risks.”

“We welcome the IMF-FSB Synthesis Paper, including a Roadmap, that will support a coordinated and comprehensive policy and regulatory framework taking into account the full range of risks and risks specific to the emerging market and developing economies (EMDEs) and ongoing global implementation of FATF [Financial Action Task Force] standards to address money laundering and terrorism financing risks,” the declaration said.

“Our Finance Ministers and Central Bank Governors will discuss taking forward the Roadmap at their meeting in October 2023,” they wrote. “We ask the FSB and SSBs [standard-setting bodies] to promote the effective and timely implementation of these recommendations in a consistent manner globally to avoid regulatory arbitrage.”

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On the topic of central bank digital currencies (CBDCs), the declaration said, “We welcome discussions on the potential macro-financial implications arising from the introduction and adoption of CBDCs, notably on cross-border payments as well as on the international monetary and financial system.”

“We resolve to deploy all available digital tools and technologies and spare no effort in fostering safe and resilient digital ecosystems, and ensuring that every citizen on our planet is financially included,” they said.

To support this outcome, the leaders committed to promoting responsible, sustainable and inclusive use of digital technology by farmers and an ecosystem of Agri-Tech start-ups and MSMEs; welcoming the “establishment of the Global Initiative on Digital Health (GIDH) within a WHO-managed framework to build a comprehensive digital health ecosystem in compliance with respective data protection regulations;” and will “leverage digital technologies for the protection and promotion of culture and cultural heritage and adopt digital frameworks for the development of cultural and creative sectors and industries.”

Based on the various documents provided, the G20’s work on a comprehensive regulatory framework for crypto assets is focused on five main points: establishing advanced Know-Your-Client (KYC) requirements for crypto companies; requiring crypto platforms to release proof-of-reserve audits on a real-time basis to regulators; creating of a uniform taxation policy; granting crypto exchanges authorized dealer status; and requiring crypto platforms to have certain positions on staff, such as a money laundering reporting officer.

In addition to crypto-assets, the joint declaration also included recommendations related to digital public infrastructure, gender equality, money laundering, and financial sector reforms.

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