Finance ministers and central bank governors from the G20, who met in Fukoka, Japan, over the weekend, made the commitment to applying the rules in a communique published on the website of the Japanese Ministry of Finance on Sunday.
The G20 group of nations has reaffirmed it will align with standards for anti-money laundering (AML) and countering the funding of terrorism (CTF) set to be finalized by the Financial Action Task Force (FATF) this month.
The FATF standards are expected to set tough operating procedures for crypto exchanges, going beyond the basic “know your customer” (KYC) rules that most major exchanges now abide by. In addition to verifying and keeping records of their users’ identities, exchanges and other service providers would have to pass customer information to each other when transferring funds, just as banks are required to do – a procedure known in the U.S. as the “travel rule.”
Blockchain analysis firm Chainalysis recently argued that the expected changes, as set out in a draft document in February, would be unrealistic and harmful for the crypto industry.
The G20, however considers the threat from crypto assets low, and recognizes their potential. The group said in the communique:
“Technological innovations, including those underlying crypto-assets, can deliver significant benefits to the financial system and the broader economy. While crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks, including those related to consumer and investor protection, anti-money laundering (AML) and countering the financing of terrorism (CFT). “
It’s also seeking possible additional measures, calling for the Financial Stability Board (FSB) and “other standard setting bodies to monitor risks and consider work on additional multilateral responses as needed.” The G20 welcomed the FSB’s directory of crypto-asset regulators, published in April, and its report on ongoing work, regulatory approaches and potential “gaps” in crypto-asset regulation.
Finally, addressing the issue of hacks in the crypto space, the G20 said:
“We also continue to step up efforts to enhance cyber resilience, and welcome progress on the FSB’s initiative to identify effective practices for response to and recovery from cyber incidents.”
Japanese flag image via Shutterstock