On Monday, February 24, 2020, the Group of Twenty (“G20” or the “Group”) urged more countries to adopt regulations that would require cryptocurrency exchanges to collect customer information as part of an effort to combat money laundering, terrorist financing, and other potential macroeconomic problems.
The G20, an international forum for global economic cooperation whose members include 19 countries and the European Union, pressed this issue following a weekend summit in Riyadh, Saudi Arabia. Specifically, the Group urged countries “to implement the recently adopted Financial Task Force (FATF) standards on virtual assets and related providers.” According to Law360, the FATF’s “travel rule” seeks to limit money laundering by calling on cryptocurrency exchanges and other “virtual asset service providers” to collect extensive identifying information about those involved in cryptocurrency transactions. The G20 endorsed the FATF’s guidelines last year and aims to build greater support for them.
In addition, the G20 reiterated a previous statement in support of regulating “global stablecoins,” which are “cryptocurrencies that seek to limit price volatility by being backed by specific assets, such as fiat currencies or metals.” Law360 explains that stablecoins “could theoretically be used or transferred across national boundaries” because “they are not backed by sovereign governments.” Although the G20 recognizes “the need to enhance global cross-border payment arrangements to facilitate lower-cost and swifter transfers,” it cautioned that the risks of stablecoins and “similar arrangements” must be “evaluated and appropriately addressed before they commence operation.” Accordingly, the Group “asks the [Financial Stability Board], 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.”
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About Katherine M. Lenahan
Katherine M. Lenahan is a Partner in the New York office of Faruqi & Faruqi, LLP and focuses her practice on securities litigation.