G7 countries will advocate for stricter regulation of cryptocurrency markets

During the 49th G7 summit, set for May 2023 and will be held in Hiroshima, Japan, the Group of Seven (G7) major industrialized democracies allegedly want to advocate for stricter controls of the cryptocurrency industry.

Kyodo News reported on March 26 that unnamed officials with knowledge of the proposal said that the strategy’s objective is to promote transparency and consumer safeguards.

This action follows worries about the potential hazards crypto assets pose to the global financial system. In November, the collapse of FTX, a prominent cryptocurrency exchange, revealed the industry’s inadequate governance and sent shockwaves across the financial markets.

The G7 intends to spearhead the development of global standards for virtual assets. Japan already has cryptocurrency legislation, and other nations like the United Kingdom, Canada, France, Germany, Italy, the United States, and the European Union are trying to declare their combined efforts in a leaders’ proclamation.

The sources indicate that the G7 would quicken the pace of related negotiations leading up to a meeting of finance ministers and central bankers in mid-May, only days before Japanese Prime Minister Fumio Kishida holds the summit in Hiroshima this year.

While virtual assets’ legal status and regulations differ from nation to country, the G7 attempts to develop worldwide norms.

In October, the Switzerland-based Financial Stability Board (FSB) issued proposals for creating a regulatory framework, suggesting that crypto assets should also be subject to laws for commercial bank operations. The FSB aims to release the framework’s final version in July of this year.

Following the growth of cryptocurrencies, the International Monetary Fund (IMF) has also identified crucial criteria for each government to consider when developing comprehensive and coordinated regulations. Directors of the IMF have decided, among other recommendations, that crypto assets should not be awarded official currency or legal tender status.

According to anonymous sources, the upcoming conference of finance ministers and central bank governors from the Group of 20 (G20) major nations is expected to take place in mid-April in Washington.

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