The regulation of cryptocurrency is something that continues to be and will continue to be, a topic of contention in the financial world. The recent collapse of LUNA and the UST stablecoin has once again stirred the conversation and has inspired global financial leaders to reconsider the cryptocurrency problem. Finance and industry leaders from the G7 nations met to discuss ways to discuss a regulatory framework for the cryptocurrency industry.
A G7 meeting was recently held in Germany, on May 18-20. The core issues discussed centered on the regulation of the crypto ecosystem and the economic issues that arose from LUNA’s collapse and the algorithmic stablecoin UST.
The finance leaders’ decisions can be summarized in the following statement, which was published Friday, May 27:
“The G7 supports work by the Financial Stability Board (FSB) to monitor and address financial stability risks arising from all forms of crypto-assets and welcomes increasing global cooperation to address regulatory issues associated with the use of crypto-assets, including in cross-border payments.”
The G7 finance chiefs further stated:
“In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB … to advance the swift development and implementation of consistent and comprehensive regulation of crypto-asset issuers and service providers.”
The FSB will work “in close coordination with international standard-setters” on crypto regulation, “with a view to holding crypto-assets, including stablecoins, to the same standards as the rest of the financial system,” the communique further details.
The urgent execution of the Financial Action Task Force (FATF) was discussed, which includes implementing a travel rule for cryptocurrency as well as more regulated reporting systems, and stronger disclosure amongst holders of crypto assets.
There is currently the belief among the G7 financial chiefs that there’s no stablecoin project that should start unless every legal and regulatory issue has been established. That means a framework will soon be put in place to curb fraudulent projects, protecting economies everywhere.
The G7 has shown its commitment to ensuring high regulatory standards are put in place for stablecoins and crypto globally. The same activity, risk, and regulatory principle will likely be placed on stable coins across the globe.
The crash of the Terra ecosystem has led to countless countries calling for regulation of the sector.
Featured Image: Megapixl © Lukvfx