The way forward on crypto regulations

Finance minister Nirmala Sitharaman indicated that there will be the need for a standard operating procedure of sorts

The finance ministers and the heads of central banks of G20 countries gathered this past weekend for a crucial meeting that could lay the foundations of future of crypto regulations. Dealing with cryptocurrencies such as Bitcoin and Ethereum and a plethora of less known, and often dodgy, ones like Dogecoin has been a sticky challenge in recent years. The challenge has become particularly pressing since billions, if not trillions, of dollars were poured into them by people in the past three years. Finance minister Nirmala Sitharaman indicated ahead of the meeting that on the agenda will be the need for a standard operating procedure of sorts, for which all participants will need to be on board.

Crypto originated as a tool for transaction, but as demand skyrocketed, people have seen it as an asset to chase high returns with. (iStock)

Crypto originated as a tool for transaction, but as demand skyrocketed, people have seen it as an asset to chase high returns with. Its borderless nature and its size today not only poses a threat to citizen’s financial health — the volatility seen in the past years has wiped off billions in individual savings — but it can also allow for large capital flows that bypass security checks. Smugglers have used it for money laundering, terrorists for their funding, and rogue nations to keep their economic inflows going even when sanctioned by large parts of the world. The interconnectedness of the global financial system indeed means that crypto regulation will need all countries to onboard a consistent standard of protocol and policies. If the world wants to mitigate the harms of crypto, a pact within the G20 — which accounts for 85% of the world’s GDP — will be crucial to ensure that crypto plays by the rules of the road that will be defined for it.