Competition for Bitcoin: G20 calls for improved cross-border payments

  • The G20 reaffirmed the need to address “the risks” of a stablecoin before the technology advances any further.
  • The G20 also called for the improvement of the global cross-border payment system in consultation with other agencies.
  • The panel recommended that member states adhere to the FATF guidelines, which foresee a further tightening towards Bitcoin and other cryptocurrencies.

On 23 February the G20 meeting of finance ministers and central bank governors issued a statement. The meeting was held in Saudi Arabia and in the statement the G20 recognises that the current economic landscape has changed. It says that the driving force behind this change are the rapid technological, environmental and demographic developments.

Dealing with the “threat” of stablecoins

The statement is about 5 pages long. However, only a small section is dedicated to the evolution of Bitcoin, Ripple and other cryptocurrencies. The main concern of the G-20 is that technological advances such as cryptocurrencies and stablecoins will progress to a point that they threaten the global economic stability. The statement says the following:

We remain vigilant to potential risks arising from financial innovations, including those risks related to financial stability, consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT) as well as their macroeconomic implications, including monetary sovereignty issues.

Therefore, the G-20 recommends applying a series of guidelines known as the Financial Action Task Force (FATF). These guidelines focus on combating money laundering and the financing of illegal activities. However, their approach tightens policies against users of cryptocurrencies. By imposing a “Travel Rule”, crypto exchanges must hold information about their clients such as name, wallet address, location of the user, among other data.

The G-20 also proposed to improve the current cross-border payment system. By doing so, the committee seeks to mitigate the emergence and implementation of an alternative such as the products of Ripple. Over the past few months, the San Franciso-based company has seen significant growth and increasing demand for its financial products. According to the company’s CEO, Ripple processes nearly 10% of the remittances sent between the United States and Mexico. The G-20 states the following about cryptocurrencies and stablecoins:

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(…) such risks need to be evaluated and appropriately addressed before they commence operation, and support the FSB’s efforts to develop regulatory recommendations with respect to these arrangements. (…) We recognize the need to enhance global cross-border payment arrangements to facilitate lower-cost and swifter transfers, including for remittances. We ask the FSB, in coordination with the Committee on Payments and Market Infrastructures (CPMI) and other relevant standard-setting bodies and international organizations, to develop a roadmap to enhance global cross-border payment arrangements by October 2020.

The Financial Stability Board presented a roadmap. In the document the international body that monitors and makes recommendations about the global financial system claims to be looking for a quick answer to deal with cryptocurrencies and stablecoins. They further stated that they are open to maintaining any benefits these assets bring to the global economy. The agency said that a more complete report will be published in April 2020 and will have a more detailed report on the regulatory problems.

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About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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