Recent reports reveal that G7 countries will advocate for stricter cryptocurrency laws globally at the upcoming 49th G7 summit which is scheduled for May 2023 and will take place in Hiroshima, Japan.
These countries will push for tighter regulation of the crypto sector, in the interest of consumer protection and greater business transparency, as the discussion about the implementation of these regulations is set to be the major highlight of the summit.
While at the summit, nations will present policies that would be directed at improving crypto transparency and increasing consumer protection while also addressing dangers that can negatively affect the performance of the global financial system.
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The G7 countries are hoping to take the lead in formulating global standards for virtual assets. Japan, which already has cryptocurrency regulations, and other members such as Britain, Canada, France, Germany, Italy, the United States, and the European Union are seeking to state their collective efforts in a leaders’ declaration.
The officials say that the G7 will accelerate the pace of related discussions toward a meeting of finance ministers and central bankers in mid-May, just days before Japanese Prime Minister Fumio Kishida hosts this year’s summit in Hiroshima. While the legal status of virtual assets and rules about them vary by country, the G7 is seeking to establish global standards.
Although before this, some countries have begun a charge to ensure proper crypto regulations are set. Japan recently announced that crypto assets are properties under the Payment Services Act (PSA). As a result, there is a mandatory registration process for crypto exchanges that want to operate within the country. Also, crypto exchanges must comply with the rules set in Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) law.
Countries like South Africa and Belgium have launched policies mandating crypto ads to include risks attainable with crypto trading. Similarly, the United Kingdom has indicated its desire to regulate the space further.
Following the collapse of one of Crypto’s leading exchanges FTX which sent shock waves to the crypto sector and negatively impacted the cryptocurrencies, ever since, there has been a clamor for the regulation of cryptocurrencies to protect customers’ assets.
The regulation of cryptocurrencies according to analysts not only protects customers’ assets, it instills greater confidence in those trading in the market, and also increases the attractiveness of the industry, facilitating wider adoption of crypto services. According to them, rolling out clear regulatory guidance would see nations become more crypto-friendly and provide a welcoming environment for growing innovative companies.
This in turn will boost economic growth for the host jurisdictions, also controllers of digital asset firms will see the value in establishing their operations in these well-regulated jurisdictions, which will allow them to trade in a safe and certain regulatory environment with clear laws that also serve to protect consumers.
There are arguments that any unregulated system has the ability to fund criminal acts. As a result, a client due diligence process akin to that of a bank is required. This can help in keeping track of investors’ real identities and verifying their locations when they are buying or selling cryptocurrencies. Any infringement of such norms should be met with severe sanctions.