G20 discussions on Tuesday focused heavily on cryptocurrencies, dealing at one point with whether digital coins can be considered money at all.
Towards the end of these discussions, members of the G20 group set a deadline for July to discuss how cryptocurrencies should be regulated by these nations.
Frederico Sturzenegger, chairman of Argentina’s central bank, said after the meeting of finance ministers that the member nations require more information before embarking on any proposals for regulation.
“In July we have to offer very concrete, very specific recommendations on not ‘what do we regulate?’ but ‘what is the data we need?’” he said.
A number of countries opposed the idea of regulating cryptocurrencies altogether, including Brazil through its central bank president Ilan Goldfajn.
If the G20 nations cannot reach a consensus, it won’t matter what they conclude. Other nations will be less likely to follow the example.
The positions of both France and Germany were made clear earlier this year as they sent a letter proposing this summit and stating that cryptocurrencies could present “potential risks in the field of financial stability.”
Financial Stability Board head Mark Carney is of the opposing view, saying that digital currencies are too limited in their market capitalization and trade volume to pose any real threat to global finance.
“Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited,” he wrote in a letter last Sunday.
The fact that there is such a difference of opinion between countries suggests the discussions in July might not go very far in the way of drafting meaningful guidelines for cryptocurrency regulation.
This could be a good thing for small companies that do not yet have the resources to comply with regulatory overhauls.
On the other hand, a regulatory framework might give cryptocurrencies more legitimacy, which would help ease some of the fears stopping major payment platforms from adopting them.
The knife cuts both ways, so these countries need to discuss a way to regulate their markets without effectively killing off any potential for innovation.