Japan plans to persuade the G20 members in improving regulations that will help curb money laundering activities. Notably, many governments, including that of Japan, strongly believe that cryptocurrency is increasingly being used for money laundering purposes.
Challenges to Crypto Anti-Money Laundering Regulations
It would be a massive undertaking for Japan to influence the leaders of the G20 countries to agree on specific crypto anti-money laundering regulations. There are many reasons for such obstacles and potential disagreements among the nations’ leadership.
The discussions will focus on how to take practical steps to ensure protection against money laundering using cryptocurrencies. The meeting, as per some insiders privy to the details, will also go over cryptocurrency trading and its impacts on the traditional banking system.
Similarly, the underlying feeling among the G20 participants is that applying very stringent regulations against money laundering through cryptocurrencies may not be a great idea.
The Upcoming G20 Meeting and FATF’s Findings
The next G20 meeting is going to take place on March 19th and 20th in Buenos Aires. One of the meeting’s top agenda items is said to be cryptocurrencies. During the G20 event, the Financial Risk Task Force, or FATF, a group consisting of 37 nations (set up by G7 industrial powers), is going to present its report. As stated earlier, the task will be use the findings from the report to come up with ways to prevent cryptocurrencies from being used for money laundering and other illicit activities.
Presently, the Japanese policymakers fear that although most of the G20 member nations believe in taking crypto anti-money laundering steps, some nations want less stringent regulations than the others. Therefore, under such kinds of disagreements over policy formulation and setting up regulations, they believe it would leave loopholes.
Japan is at the forefront of cryptocurrency trading, although it did also carry out its own checks before giving the go-ahead. Moreover, since Japan has seen a massive theft of over $530 million worth of digital currency from the country’s Coincheck crypto-exchange, it has launched a crackdown on illicit activities related to cryptocurrencies. The crackdown includes monitoring the use of digital currencies in money laundering.
G20 & What Other Countries May Propose
While Japan has its own list of items on the agenda for the G20, Germany and France also plan to contribute through what appears to be a joint proposal. Reportedly, their proposal will aim to suggest methods to monitor the cryptocurrency market by developing a comprehensive regulatory framework.
Notably, one of the EU watchdogs of the cryptocurrency space stated that the short-term strategy will be to apply crypto anti-money laundering rules which would also curb terror financing. Furthermore, he pointed towards building awareness among consumers about the potential risks of dealing with cryptocurrency based money laundering.
Challenges Ahead in Implementation of Crypto Anti-Money Laundering Regulations
Many G20 nations believe that their regulatory efforts should not stifle the innovation in blockchain technology. since it can offer a lot of benefits for different industries. Additionally, because there are different laws in every country, setting up international ICO regulatory rules will be quite difficult.
Some of the challenges that they need to address include the following.
- Since cryptocurrencies fall into payment systems, commodities, and currencies, it would be difficult to devise and apply the same rules to different cryptos. That’s because each crypto-platform tries to offer a unique set of services.
- Similarly, each country will have to deal with its traditional banking system. For example, a recent report by Banque de France, the country’s central bank, explained that Bitcoin cannot be considered by consumers as a means of payment or real currency. So, interpretations by central banks of each country may differ greatly, making it hard for the ordinary consumers to determine just which rules to follow.
- There is also a difference of interpretation between different bodies within the same country. For instance, Financial Crimes Enforcement Network in the US says cryptocurrencies have value. However, Commodity Futures Trading Commission in the US defines cryptocurrencies as commodities.
- The identity of the user remains a big question mark and something that worries the traditional banking systems.
- Finally, the ability of Bitcoin or other cryptocurrencies to send money across borders also comes raises regulatory concern
Clearly, authorities around the world have their work cut out for them when trying to regulate the crypto industry. It’s also obvious that an effective regulatory framework for cryptocurrencies is not something the can be developed overnight. It will definitely be a laborious and time-consuming task.