At the latest G20 summit in Buenos Aires, Argentina on December 1, 2018, G20 leaders signed a joint declaration to develop a regulatory framework for cryptocurrencies in accordance with Financial Action Task Force (FATF) standards.
The signing of this declaration has been in the works for some time now. During the last G20 summit in July 2018, the leaders postponed signing this agreement as they needed clarity from the FATF standards.
With the FATF standards clarified, G20 leaders acknowledged the need to develop and establish a regulatory framework with special attention to cryptocurrencies and the digitization of the global economy.
As stated in the declaration, the regulatory framework of cryptocurrencies promotes sustainable global economic growth by supporting:
An open and resilient financial system, grounded in agreed international standards.
The declaration represents an agreement to establish sound standards to deal with money laundering, terrorist financing, and other threats to the global financial system.
As seen in Section 25 of the declaration, G20 leaders stated:
We will step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated. We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards, and we will consider other responses as needed.
Perhaps the most important or at least most anticipated section of the declaration is the G20s take on cryptocurrency taxation.
Crypto investors and traders alike wanted clarity on the taxation of cryptocurrencies for a long time now. Finally, G20 leaders are formally addressing this area of uncertainty.
Section 26 of the declaration document addresses this need to develop an advanced and uniform taxation system to combat the issues arising from the digitization of the global economy. They did not specifically use the word “cryptocurrency”, but instead used the word “digitization.”
However, this section clearly targets the taxation of cryptocurrencies.
We will continue our work for a globally fair, sustainable, and modern international tax system… We will continue to work together to seek a consensus-based solution to address the impacts of the digitalization of the economy on the international tax system.
There was no cryptocurrency taxation framework officially set, but the signing of this declaration is the first step in the right direction.
Japan is the site of next years summit and we can expect to see further developments on the matter then. Also, market participants expect a final report on the regulatory framework and taxation surrounding digitization in 2020.
When do you think we will have an established regulatory framework from G20 world leaders? Will a regulatory framework improve the cryptocurrency industry and pave the path to mass adoption? Let us know in the comment section below.