A government official that has direct knowledge of the matter said that Japan is planning to urge its G20 counterparts at a meeting that is scheduled next week to ramp up efforts to prevent cryptocurrencies from being utilised for money laundering.
Central bankers and finance ministers of the Group of the 20 major economies in the world are scheduled to meet in Buenos Aires on the 19th and 20th of March, with cryptocurrencies set to be included on the agenda.
However, the official said that the prospects for the finance leaders of the G20 to agree on specific global rules and discuss them in a joint communique are considerably low, given the differences in the approach of each country, a view that is echoed by another official who is involved in G20 discussions.
One of the officials stated: “Discussions will focus on anti-money laundering steps and consumer protection, rather than how cryptocurrency trading could affect the banking system.
“The general feeling among the G20 members is that applying too stringent regulations won’t be good.”
The Financial Action Task Force (FATF) that is based in Paris is a 37-nation group that is set up by the G7 industrial powers to battle illicit finance. It is set to report to the G20 its discoveries on ways to prevent cryptocurrencies from being utilised for money laundering.
The official said that policymakers in Japan fear that while there is broad consensus among the nations included in the G20 on the necessity for such steps, some nations have looser regulations as compared to others, which omits loopholes for money laundering.
Japan was the first country to approve a national system to oversee the trading of cryptocurrencies, even though it carried out checks on various exchanges this year following the theft of $530 million from Coincheck Inc, a cryptocurrency exchange.
Germany and France have said that they will make joint proposals in order to regulate the bitcoin cryptocurrency market.
A head of the watchdog of the European Union said that a short-term strategy could be to focus on applying rules on terrorist financing and anti-money laundering, informing the consumers of the risk of trading in cryptocurrencies and restricting banks from holding them.
The Japanese officials said that the trick would be to apply regulations in order to protect the consumers and stop illicit activity, without stifling innovation in the fast-growing sector crypto-currencies and fintech.