The president of the Financial Action Task Force (FATF), Marcus Pleyer, has called on the Group of Seven (G7) countries to lead the way in shutting down what he calls “lawless crypto.”
In an op-ed for the Financial Times, Pleyer argued that digital currencies like Bitcoin and stablecoins designed to track the value of other assets “pose a significant risk to the integrity of global financial systems” and “facilitate illicit activities.”
“The G7 should act collectively and decisively” to address these risks, he wrote. “Through its members’ leadership, experience, and resources, the G7 is uniquely positioned to define the global regulatory framework that can tame lawless global virtual assets.”
Pleyer said that the FATF, which is an intergovernmental organization that sets standards for anti-money laundering and counter-terrorist financing, has been working to develop guidelines for regulating virtual assets since 2018.
He noted that the FATF’s recommendations require virtual asset service providers (VASPs) to comply with the same anti-money laundering and counter-financing of terrorism rules as traditional financial institutions.
However, he said that these recommendations are not being properly enforced by all countries, leaving “significant gaps in the global regulatory perimeter.” He called on the G7 to “commit to the swift implementation and enforcement of the FATF standards.”
Pleyer also expressed concern about the rise of stablecoins, such as Facebook’s Libra (now known as Diem), which are designed to track the value of other assets such as the US dollar.
“While some stablecoins have potential benefits, they can also pose significant risks to financial stability, as they could be prone to a run should market participants lose confidence in their ability to maintain their pegs,” he said.
He called for a “harmonized” approach to regulating stablecoins that would “avoid regulatory arbitrage and ensure a level playing field.”
Finally, Pleyer called on the G7 to “remain vigilant and proactive” regarding the use of virtual assets by terrorists and other criminals.
“While modern innovation is welcome, it cannot come at the expense of public safety and security,” he said. “The G7 must lead the world in setting the global standard for regulating virtual assets.”
The op-ed comes as regulators around the world are stepping up their efforts to regulate digital currencies.
Last month, the United States Treasury Department proposed new rules that would require VASPs to report certain transactions to the government, in an effort to crack down on money laundering and other illicit activities.
Meanwhile, the European Union is discussing a new regulatory framework for digital currencies that would require all VASPs to be licensed and meet certain anti-money laundering and terrorist financing standards.
And last year, the FATF launched a new set of guidelines for regulating virtual assets that require VASPs to verify the identities of their customers and report suspicious transactions to authorities.
Despite these efforts, however, many in the crypto industry argue that excessive regulation will stifle innovation and drive users to less-regulated platforms.
Critics also point out that traditional financial institutions are often used for money laundering and other illicit activities, and that virtual currencies offer many benefits such as greater financial inclusion and lower transaction fees.
Nevertheless, Pleyer and other regulators insist that the risks posed by digital currencies are too great to ignore, and that a regulatory framework is needed to ensure that they are used responsibly.
“The G7 has a crucial role to play in shaping the future of global finance,” Pleyer wrote. “Working together, the G7 can create a regulatory environment that encourages innovation while safeguarding the global financial system from abuse.”
The Financial Action Task Force (FATF) President, Marcus Pleyer, has called on the Group of Seven (G7) to take the lead in shutting down the “lawless crypto world.” Pleyer is urging the G7 countries to put governance, investor protection, and financial stability first, ahead of the rapidly growing digital asset market.
He voiced his concerns during a virtual meeting with the finance ministers and central bank governors of the G7 countries, highlighting the challenges posed by cryptocurrencies to global financial stability and security. He emphasized the need for a coordinated response among the G7 countries to mitigate these risks and protect their citizens from potential crypto-related fraud and illicit activities.
Pleyer’s call to action comes as the cryptocurrency market continues to gain momentum, with bitcoin hitting an all-time high of over $63,000 earlier this year. The rapid growth of the digital asset market has attracted the attention of investors and regulators worldwide, with some countries implementing various measures to regulate and monitor cryptocurrency transactions.
However, Pleyer warned that the lack of international cooperation in regulating the cryptocurrency market has created a “wild west” scenario, leading to an increase in illicit activities, including money laundering, terrorist financing, and cybercrime. He urged the G7 to take the lead in setting global standards for regulating and monitoring cryptocurrencies, putting an end to the “lawless crypto world.”
The G7 comprises the world’s seven advanced economies, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The group is responsible for discussing and coordinating economic policies and addressing global financial issues.
Pleyer’s call to action is a timely reminder of the risks posed by the cryptocurrency market, despite its potential benefits. The lack of regulation and oversight in the digital asset market has created an environment where criminals can engage in illegal activities with relative ease.
Furthermore, the volatile nature of cryptocurrencies makes it difficult to determine their true value, leading to instability in the financial markets and exposing investors to significant risks. Pleyer’s request for international cooperation and standardization is crucial to ensure a level playing field for investors and protect the global financial system from potential systemic risks.
In conclusion, Pleyer’s message to the G7 highlights the urgent need for international cooperation in regulating and monitoring cryptocurrencies. The lack of a cohesive regulatory framework has led to a “wild west” scenario in the digital asset market, exposing investors and the financial sector to significant risks. The G7 countries must prioritize the safety and security of their citizens by setting global standards for the cryptocurrency market, putting an end to the “lawless crypto world.”