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G20 to propose first global crypto guidelines In October 2022

G20 to propose first global crypto guidelines In October 2022
Photo Credit: Pixabay
12 Jul, 2022
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The Financial Stability Board (FSB) – a body of regulators, treasury officials and central bankers from the Group of 20 economies (G20) – would propose "robust" global rules to regulate the cryptocurrencies market, which is “undergoing constant turmoil and speculations”.  

Recent turmoil in crypto markets has highlighted their volatility, structural vulnerabilities and increasing links to the wider financial system, the FSB said in a statement. The body has so far limited itself to monitoring the crypto sector, saying it did not pose a systemic risk. 

"The failure of a market player, in addition to imposing potentially large losses on investors and threatening market confidence arising from crystallisation of conduct risks, can also quickly transmit risks to other parts of the crypto-asset ecosystem," the FSB said in a statement. 

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The value of bitcoin, the largest cryptocurrency, has slumped some 70% since its November record of $69,000, leaving many investors suffering losses. 

TerraUSD stablecoin collapsed earlier this year, and withdrawals and transfers from major crypto firms Celsius Network and Voyager Digital have rattled markets. According to experts, Stablecoins should be captured by robust regulation if they are to be used as a means of payment, the FSB said. 

Last week, Singapore-based Vauld announced that it is suspending its operations as “the current market climate has led to significant customer withdrawals”.  

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Vauld’s move amid the crash in cryptocurrency market has raised questions about the credibility of virtual currencies. 

"The FSB will report to the G20 Finance Ministers and Central Bank Governors in October on regulatory and supervisory approaches to stablecoins and other crypto-assets," the FSB said. 

The FSB has no law-making powers but its members can apply for regulatory principles in their own jurisdictions. However, FSB members are committed to using the enforcement powers within the legal framework in their jurisdiction to promote compliance and act against violations," it said, adding that the global guidelines to regulate the crypto market are becoming ever important. 

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India, a member of the G20 will also fall under the jurisdiction of these new guidelines. Already the rules regarding TDS on cryptocurrency assets are storming the Indian crypto market. As per the new guidelines, cryptocurrency buyers are required to deduct 1% of the amount paid to the seller as TDS. Investors believe this migration will not only hurt Indian crypto businesses but will also inherently it will hinder the growth and development of innovation in this space.