Cryptocurrencies became popular even among those who didn’t have an idea what blockchain technology is. One of the reasons for this is the possibility of getting rich quick because of the volatility of cryptos. However, one of the things that made crypto prices looking wobbly the past few days is regulatory concerns.
China has started to hunt down crypto activity in September while South Korea almost banned crypto exchanges in the country. And the number of countries that are running stricter rules are becoming more and more common.
However, the G20 summit on cryptocurrencies that is expected to happen in Buenos Aires has provided a much-needed boost to the price of cryptocurrencies.
What is it going to do?
G20’s financial stability board is set to discuss cryptocurrencies and how it could potentially impact economies, groups, and individuals. The goal is to also coordinate the international efforts that can eliminate the data gaps in the crypto market.
If you will ask the G20, cryptocurrencies don’t really pose a risk to the global financial system as of the moment. However, there is a possibility that crypto market could threaten the international financial stability if its use has broadened in the future. The ministers and central bank governors were warned of these possibilities in a prelude to the two-day G20 summit.
According to Financial Stability Board Chair Mark Carney, “crypto-assets raise a host of issues around consumer and investor protection”. He also added that what makes cryptocurrencies dangerous is the potential of crypto-assets to be used for illicit activities from money laundering to terrorist activities. He also urged the finance ministers in order to lessen the risks by working hand-in-hand with each other.
Why Worry of Cryptos?
Is there anything financial institutions should worry about for cryptos? According to the G20 advisory unit chief, without improvements, the global financial system could actually shrink. With crypto use and interconnectedness, these are some things that traditional financial systems should be worried about.
The Financial Crisis Inquiry Commission also mentioned that the lack of understanding of the interconnectedness of unregulated financial products by domestic regulators has resulted in the 2008 financial crisis. And because of this, Treasury Secretary Steve Mnuchin together with his counterparts both in France and Germany have called for discussions regarding the cryptocurrency at the summit itself.
Mnuchin has been able to make a working group among US regulators that were able to take a closer look at the cryptocurrency oversight.
Could this mean that G20 isn’t going to have any initiative to stop cryptocurrencies? Carney has outlined an intention to avoid new regulations for cryptocurrencies. However, Carney wants an adaptation of existing rules for the governance of the crypto market. And after the announcement, Bitcoin and Ethereum both experienced bullish trends.
Aside from his statements regarding the possibility of regulating cryptocurrencies, he announced that FSB will undergo a review that will guarantee that FSB will fit the purpose when it comes to assessing and making the necessary changes in financial regulations. Can the growth be sustained by cryptos for the coming days? Since G20 relaxed its stance regarding cryptocurrencies, it appears that it is exactly what the sluggish market needed at this point so far.