What is the G20 Summit?
The G20 Summit is an annual event in which representatives from the governments and central banks of the world’s wealthiest countries get together to discuss a variety of international issues, primarily pertaining to the global economy. G20 stands for “Group of Twenty,” and the group currently consists of 19 countries plus the EU, although non-member countries are sometimes invited as “guests” to participate in select Summits. The exclusive membership policies of the group have been the subject of criticism since the G20’s inception in 1999, and the Summit itself has been the target of protests by left-wing activists.
Each year the G20 Summit is held in a different member nation and focuses on pertinent issues related to global financial policy, international trade and regulations. This year, the event was held in Buenos Aires, Argentina and cryptocurrencies were on the agenda for the first time.
When you get a bunch of finance bigwigs from different nations together, it shouldn’t be too surprising that they have different ideas about how things should be done. Add into the mix a disruptive “new” technology like Bitcoin and the spectrum of responses gets even more lively! That being said, the mere fact that cryptocurrencies made it onto the agenda for the G20 Summit is big news in terms of mainstream adoption, the legitimacy of digital assets, and the future of regulation. It is a clear sign that economic leaders from around the world are beginning to take Bitcoin and cryptocurrency seriously.
So, what happened?
There was understandable anxiety within the cryptocurrency community when it was announced in December 2017 that cryptocurrencies would be on the agenda for the 2018 G20 Summit. Uncertainty about the potential for widespread crackdowns, harsh new regulatory policies, or other international efforts to curtail the development of crypto had many investors on edge. Conversely, others argued that recognition by global finance ministers was a good thing for the advancement of Bitcoin and other cryptos. While the shape of things to come remains to be seen, the short term take away from the G20 Summit appeared to be fairly positive.
A communiqué released by the summit stated, “We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly.” The statement also suggested that most nations share the opinion of Bank of England head Mark Carney, who said, “crypto-assets do not pose risks to global financial stability at this time.”
For crypto-enthusiasts, it may be wise to approach these statements with cautious optimism. Carney’s “at this time” clause should not be underplayed, as the Summit’s own communiqué does suggest that “at some point they could have financial stability implications.” Additionally, while acknowledging the potential for crypto to improve aspects of the global economy, the document also addresses concerns. “Cryptoassets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing,” it reads.
What does this mean for Bitcoin?
The major takeaway from the G20 Summit is perhaps not so much in the rhetoric, but in the coalition’s commitment to solidify a regulatory policy surrounding crypto, by July. Following the event, Argentina’s Central Bank chair Frederico Sturzenegger explained that while member nations agreed that cryptocurrencies should be looked at, regulations could not be implemented without further information. The deadline for getting said information together and coming up with a plan, however, is apparently set for July. Sturzenegger said, “In July we have to offer very concrete, very specific recommendations on, not ‘what do we regulate?’ but ‘what is the data we need?'”
While there appeared to be a general agreement amongst member nations concerning the need to address cryptocurrencies, the move towards the proposed regulatory protocol and deadline was not met with unanimous consent. Different nations clearly have different ideas about the role of cryptocurrencies and what form regulation should take. Countries such as Australia and Canada, for example, have already begun regulating cryptocurrencies internally by requiring exchanges to register with anti-money laundering agencies. Brazil’s Central Bank president, on the other hand, has expressed a negative view concerning cryptocurrencies, and suggested that his country may not comply with policies put forth by the G20. The UK, meanwhile, has not taken many steps in terms of regulating cryptocurrencies as of yet, although Parliament’s Treasury Committee launched an inquiry into cryptocurrencies in February.
Until July rolls around, we won’t really know what exactly the implications of the G20 Summit are. Of course, anyone familiar with cryptocurrencies will likely wonder how, exactly, these agencies plan to regulate something that is largely unregulatable by design. As mainstream adoption continues to grow and institutional investors enter the crypto space, it is clear that bitcoin has changed the game in terms of imagining alternatives to the current financial system. Twitter CEO Jack Dorsey recently stated, “The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin.” Whether he is right or not, it seems increasingly likely that existing frameworks will need to evolve to accommodate crypto rather than attempting to fit crypto into systems designed to regulate centralised currencies. Will that happen by July? We’ll see.