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The Group of Seven (G7) major industrialized democracies, consisting of Japan, Britain, Canada, France, Germany, Italy, the United States, and the European Union, are reportedly planning to promote tougher regulations of the cryptocurrency sector during the 49th G7 summit, scheduled for May 2023, in Hiroshima, Japan. The goal of the plan is to increase transparency and consumer protections, according to anonymous officials with knowledge of the plan, as reported by Kyodo News on March 26.

Concerns About Potential Risks to the Global Financial System Posed by Crypto Assets

The move comes in the wake of concerns about potential risks to the global financial system posed by crypto assets. The collapse of FTX, a major cryptocurrency exchange, in November 2022, exposed the poor governance of the industry and sent shockwaves through financial markets.

Establishing Global Standards for Virtual Assets

The G7 is hoping to take the lead in formulating global standards for virtual assets. Japan, which already has cryptocurrency regulations, and other members, are seeking to state their collective efforts in a leaders’ declaration.

The officials say that the G7 will accelerate the pace of related discussions toward a meeting of finance ministers and central bankers in mid-May, just days before Japanese Prime Minister Fumio Kishida hosts this year’s summit in Hiroshima.

International Regulatory Framework for Crypto Assets

The Financial Stability Board (FSB), headquartered in Switzerland, released recommendations in October 2022 for creating a regulatory framework, stating that crypto assets should also be subject to regulations for commercial bank activities. The FSB plans to announce its final version of the framework in July this year. The International Monetary Fund (IMF) has also outlined key elements for each country to consider in the development of comprehensive and coordinated rules following the spread of crypto. Among other guidelines, IMF directors have generally agreed that crypto assets should not be granted official currency or legal tender status.

Upcoming Meeting of Finance Ministers and Central Bank Governors from the G20

Issues associated with crypto assets are also likely to be on the agenda of the upcoming meeting of finance ministers and central bank governors from the Group of 20 (G20) major economies in Washington in mid-April, according to the officials who spoke on condition of anonymity.

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