Is blockchain to be regulated at international level?
As mentioned in the article on trends in blockchain regulation in 2018, 2018 will probably be remembered as the year in which blockchain began to be regulated in various areas. Public institutions are constantly floating new ideas in a number of different countries.
The measures taken by lawmakers and regulators do not solely reflect a wish to perform tasks such as ensuring financial stability, consumer and investor protection, and crime prevention. Legislators have evidently noticed that there may be true benefits to development of blockchain in their jurisdictions, such as assistance for the local innovation ecosystem, capital inflow, or the attracting of businesses and technological projects.
The global landscape formed by the local laws and various approaches to this subject is becoming more and more picturesque. Blockchain is also a global trend – due to decentralisation being the essence of this technology it is often difficult to attribute a specific jurisdiction to a particular blockchain activity. This is a further challenge for institutions that have become accustomed to thinking in terms of strictly defined geographical jurisdiction.
This has led to suggestions for international coordination of blockchain-related public policies and regulatory measures. Numerous organisations and international forums have started looking at the subject.
The G20 on cryptocurrencies
The most recent opportunity for high-level talks was a meeting of G20 ministers of finance and heads of central banks held in March. The subject was raised by Germany and France, calling for moves to coordinate the measures. The blockchain, and specifically cryptocurrency world, watched the event closely, waiting for potentially important conclusions on the future of blockchain laws.
Previously, the head of the Financial Stability Board (FSB), Mark Carney, sent a letter to the G20. The FSB is an international body which monitors the global financial system and was set up at the time of the outbreak of the financial crisis. The letter stated the FSB’s position on risks posed to financial stability due to the rapid growth of crypto-assets – clearly considered to include cryptocurrencies and tokens. In the FSB’s view, crypto-assets do not pose that risk at the moment, mainly due to the relatively small scale and limited links to the traditional financial sector. The FSB made it clear however that this may change and that it would be monitoring the situation. It also stated that crypto-assets give rise to other risks: threats to consumer and investor protection and risks related to crime, money laundering, and financing of terrorism. The FSB said it was in favour of further international coordination, suggesting that existing international bodies such as the Committee on Payments and Market Infrastructures (CPMI), Financial Action Task Force (FATF), and International Organization of Securities Commissions (IOSCO) should be involved.
The document summarising the G20 meeting presented similar conclusions. Particular emphasis was placed on the need for action from the FATF, which is an inter-governmental organisational that draws up the standards and recommendations for combating money laundering. A timeline was also established (July 2018) for the CPMI, FATF and IOSCO, and possibly other similar organisations, to present their crypto-assets measures.
Conclusions
The G20 did not make any specific decisions, but the envisaged measures are significant. In the course of just a few months the key international forums are to decide how to proceed with regard to crypto-assets. These include institutions responsible for anti-money-laundering standards (FATF), bringing together the local securities market authorities (IOSCO) and a key Bank for International Settlements committee (CPMI).
Shortly we can expect specific plans for crypto-asset intergovernmental cooperation, which will at least to some extent determine the global future of blockchain.
Jacek Czarnecki
