G7 to Discuss Tightening Regulations on Cryptocurrencies: Report

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Discussing tightening regulations in preparation for the Hiroshima Summit

The G7 (seven developed countries) are expected to discuss tightening regulations on the crypto-asset (virtual currency) sector toward the finance ministers and central bank governors meeting in mid-May. Kyodo News reported, citing sources familiar with the matter.

The G7 countries plan to issue a joint declaration on how to respond amid concerns about the potential risks cryptocurrencies pose to the global financial system, according to sources familiar with the matter. In particular, it is said to aim to increase transparency and consumer protection in the cryptocurrency business.

Currently, the legal status of cryptocurrencies and what rules apply differs from country to country, but the G7 hopes to take the lead in setting global standard rules.

The G7 finance ministers and central bank governors meeting is expected to be held in Niigata in mid-May, just days before the G7 Hiroshima summit. Since Japan is an international leader in comprehensive virtual currency regulations, it is said that it is poised to lead the talks as the chair country.

Cryptocurrencies are also likely to be on the agenda of the Group of 20 (G20) Finance Ministers and Central Bank Governors Meeting in Washington in mid-April.

What is G7

Abbreviation for Group of 7. It refers to the seven major countries of Japan, the United States, the United Kingdom, Canada, France, Germany, and Italy. In addition to these seven countries, the EU (European Union) is also a member of the G7.

▶Cryptocurrency Glossary

background

In the background of the discussion of tightening regulations on virtual currencies, in particular, the collapse of the major virtual currency exchange FTX in November 2022 and the fact that it was revealed that its management was sloppy.

Additionally, the recent shutdowns of Silicon Valley Bank (SVB) and Signature Bank are also taken into consideration. SVB was a bank that backed technology-related startups, and Signature Bank was known to have had cryptocurrency companies as clients.

Related to this, Bernie Frank, director of Signature Bank, said the New York State Department of Financial Services shut down the bank in part because it sent a warning message that cryptocurrencies are dangerous and should be avoided. have an opinion.

In response to the remarks, U.S. Congressman Tom Emmer also said that the closure of signature banks “seems to be affected more by rising interest rates than by cryptocurrency volatility (the magnitude of price fluctuations).” He criticized it for contributing to anxiety.

The New York State Department of Financial Services said Signature Bank has stakes in a variety of sectors, denying it was intended to show the risks of the cryptocurrency industry.

connectionUS Congressman questions FDIC over signature bank closure

IMF report

Since the FTX bankruptcy, various international organizations are discussing the risks of cryptocurrencies. For example, the International Monetary Fund (IMF) released a report earlier this month titled “The Macro-Financial Impact of Cryptocurrencies.”

It argues that if the spread of virtual currencies and stablecoins without underlying assets such as bitcoin progresses, it will pose risks to the effectiveness of monetary policy, exchange rate control, capital movement control measures, etc. .

connection: IMF warns of cryptocurrency impact on banks = G20 report

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