Despite gaining legitimacy in the eyes of many more individuals across the world, cryptocurrencies are still a contested topic within regulatory circles, especially with the regulatory bodies of developed countries.
FSB: Crypto Assets Don’t Pose A Risk To Global Financial Stability
The Financial Stability Board (FSB) recently released a report highlighting cryptocurrencies or “crypto-assets” as the board likes to call them. The FSB commented on its sentiment regarding cryptocurrencies, stating:
“While the FSB believes that crypto-assets do not pose a material risk to global financial stability at this time it recognizes the need for vigilant monitoring in light of the speed of market developments.”
For the uninitiated, the FSB is an international body that consists of financial leaders and organizations, with an objective of making recommendations to G20 nations regarding optimal financial policies and practices. In the same report, the G20-affiliated body also laid out a framework for monitoring the cryptocurrency industry, with the FSB focusing on price volatility, ICO prevalence, institutional exposure and real-world transactional use as the primary indicators for threat assessment.
The sentiment regarding cryptocurrencies made by the organization was echoed by the U.S. Federal Reserve chairman at the U.S. House of Representatives earlier this week, who also stated that cryptocurrencies “aren’t big enough” to pose a financial threat at this time. However, just like the FSB, the Fed Chairman also indicated that he and fellow regulators will continue to keep an eye on the cryptocurrency industry moving into the future.
Japan’s Role As A Lead Cryptocurrency Regulator
Japan has long been held as a pseudo “crypto capital,” where cryptocurrency adoption and innovation is as widespread as other leading technologies. Despite widespread retail adoption and a growing crypto-based economy, Japan has one of the harshest regulatory climates around cryptocurrencies in the world.
Following the cryptocurrency rally of 2017, along with the subsequent $550 million hack of the Japan-based CoinCheck exchange, the Japanese Financial Services Agency (FSA) began to impose strict rules on crypto-affiliated firms in a bid to curb consumer risk and cases of money launderers utilizing cryptos in malintent. The rules namely took the form of new rules regarding KYC/AML, cryptocurrency storage options and a ban on the trading of privacy-centric cryptocurrencies within Japan’s borders.
The fears of money laundering came up after a series of cases where criminals utilized privacy cryptocurrencies to move money anonymously, away from the eyes of regulators. A local Japanese news source highlighted an instance where an organized crime group located in Tokyo laundered 30 billion yen ($270 million) through Monero, ZCash, and Dash.
Speaking of cases like the aforementioned, an official from the FSA stated:
“It’s nearly impossible for Japan to handle the problem (money laundering) alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G20) would take the same steps toward prevention.”
The issue with money laundering through cryptocurrencies has been a common theme with many regulators over the course of the past decade. The U.S. Fed chairman also noted:
“They (cryptocurrencies) are very challenging. Cryptocurrencies are great if you are trying to hide money or if you are trying to launder money. So we have to be very cautious and conscious of that.”
Due to Japan’s current position as a cryptocurrency regulation proponent, it is likely that Asia’s second-largest economy will continue to push a harsh stance regarding cryptocurrencies to fellow G20 nations as this space develops further.
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