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So, something kind of happened during the past G20 summit this summer.
For those who might not yet know, the G20 summit is the meeting of the Finance Ministers and Central Bank governors representing 19 different countries and the European Union with a focus on international economic cooperation.
A product of this years G20 summit includes a new task force going by the name: Financial Action Task Force (FATF), which brings with it global regulations in regards to cryptocurrency.
Regulations which at the moment are not compulsory, but those countries who fail or refuse to implement them will risk FATF blacklisting, imposed sanctions, and heightened levels of international scrutiny.
So good old peer pressure coming through.
Here is one example of the kind of requirements countries and virtual asset service providers are expected to follow:
- They are mandated to share information about their customers for each digital transfer.
Information like the names of senders, recipients, account numbers and transaction history.
Fungibility, is essential for any money supply to maintain its usability. The aspects of public, permission less blockchains can only be a hinderance to fungibility if an entity threatens to take action against those who are trading with or holding “flagged” coins. Coins that (unbeknownst to you) have been involved with an exchange hack, or a drug deal, or other kinds of illicit activity.
Despite the ability to flag certain wallets that are associated with hackers, coins inevitably get flushed out into the markets and distributed to thousands of different accounts. It’s seen each time after a major hack.
This is usually where privacy coins step in, that is coins that are designed in such a way where things like their public addresses are not publicly available on the blockchain, where things like their transaction history is easily obfuscated. I would not be surprised if these privacy coins are made illegal on these regulatory compliant exchanges, much like what’s happened in China.
This is what the members of this year’s G20 summit have decided.
It’s a perfect example showcasing how these people not only do not value these rights, and are quick to implement laws that snuff out your ability to practice those rights. But also it shows how little they know of this space, and just want to slap old fashioned regulations on a technology that works in dramatically different ways.
The crux of these new regulations hangs on these issues: Can these countries and companies comply? Is it even possible? Furthermore, can they be enforced. They have already clearly stated the threat of exclusion and even sanctions put in place for any country that chooses not to comply or tries but fails.
It seems all this talk of wanting to facilitate growth and innovation was just a load of hot air.
Also as per usual for situations like this, when one thing gets clamped, it forces attention on ways to get around it.
At the moment there seems to be a number of traders who are willing to pay upwards of a 20% premium for freshly mined and minted Bitcoin. A coin with zero trade history, a coin that is guaranteed to pass through these strict regulations. I fully expect that if these regulations are pursued by the governments of these 19 nations and the European Union, there will be a premium for any newly minted coin of any cryptocurrency, perhaps motivating the creation of cryptocurrencies that have a higher rate of inflation? Definitely will inspire a strong black market for “dirty” coins.
It seems what these finance ministers and central bankers failed to understand is the main pillar of cryptocurrencies, and one that is most beautiful in my opinion, is the peer to peer nature and ability that these coins have at their core. The more these governments and bankers attempt to flex their regulatory muscles the more they will encourage users of cryptocurrencies to cut them out altogether. It’s a beautiful thing.
Check out the video for some beautiful views of Western Australia ↩