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FameEX Hot Topics | G7 Nations Advocate for Enhanced Digital Currency Regulations

2023-03-31 15:52:40

The G7 countries are intensifying their focus on digital currency regulation in response to multiple large-scale collapses within the industry. The United States has suffered greatly due to the abrupt failures of Silicon Valley Bank (SVB) and Signature Bank, both of which served numerous digital asset service providers. France, Germany, and Italy also faced substantial losses following the unexpected downfall of FTX. In February, FTX's Japanese branch informed customers that they could begin withdrawing their funds, assuring them that these assets would not be part of the U.S. bankruptcy proceedings.

Japan is the only G7 nation with a well-established legal framework for digital currencies, leading to proposals allowing domestic investors to trade foreign stablecoins on local exchanges. In contrast, the U.S. and Canada have attempted to apply existing banking and securities regulations to the digital currency industry, yielding mixed outcomes. The International Monetary Fund (IMF) is now assisting G7 countries in their quest for a comprehensive legal framework for digital currencies. Previously, the IMF has advised against granting digital currencies legal tender status and expressed concerns about cryptoization in local economies.

Moreover, the Financial Stability Board (FSB) has put forth recommendations encouraging regulators to treat digital currencies similarly to banks and other financial institutions. With the European Union's Markets in Crypto Assets (MiCA) law nearing implementation, France, Italy, and Germany will soon possess a legal framework to regulate digital currencies. G20 countries are also swiftly advancing towards digital currency regulations, spearheaded by India. As G20 president, India is committed to using its influence to promote digital currency regulations from a global standpoint to avoid regulatory arbitrage.

India's Finance Minister, Nirmala Sitharaman, said, "We are talking to all nations, that if it requires regulation, then one country alone cannot do anything." She continued, "We are talking with all nations if we can make some standard operating procedures which everyone follows to make a regulatory framework, and if it can be effective." In summary, G7 and G20 nations are increasingly acknowledging the importance of a unified and comprehensive regulatory approach to digital currencies. By working together and drawing from shared experiences, these countries aim to create a solid legal framework that addresses the challenges and risks related to digital assets while fostering innovation and growth within the industry.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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