The G20 Summit Was More Important Than I Thought
The one thing most reading this already know: markets have been green the past couple of days, and Twitter/Reddit sentiment seems to be on the rise.
Media outlets have been quick to attribute this to the generally positive statements coming out of the G20 Summit held Monday, March 19th and Tuesday, March 20th of this week. The G20, held this year in Argentina, represents central bank governors from twenty of the world’s most advanced or emerging economies. Notably, major crypto hubs like South Korea, Japan, USA, Russia, and China have major voices at the Summit.
There's a ton of news coming out of the Summit this morning, and I read a bunch of the articles so you don’t have to.
Here are three of the most salient points, in my opinion:
Multilateral Regulation with a July 2018 Deadline for Recommendations: The prevailing thought from virtually all G20 members was that regulation should come with international cooperation.
The G20 released a statement, basically saying, We should regulate this. We should do it as internationally as possible. We should have a first set of regulations on the table by July 2018.
Hot take: I view this is a major positive because it achieves two things:
1) There is a deadline of July 2018 for regulation recommendations from member countries, which isn’tthat far away. This takes away some fear that regulatory questions could linger for years.
2) Regulations may have an international tone, which would simplify things for folks transacting with, and transferring value between, various countries. Few crypto-asset traders want to contend with 250 different sets of regulation.
No Current Financial Stability Implications: This one is simple. The G20 acknowledged that crypto is still just 1% of the global GDP and does not pose a risk to financial markets.
Financial Stability Board chairman Mark Carney, who also heads up the Bank of England, said that at the moment there is not much to fear from crypto-assets:
From Carney: "The FSB's initial assessment is that crypto-assets do not pose risks to global financial stability at this time. This is in part because they are small relative to the financial system."
Hot take: My view on this is positive. This statement, not the first we've heard from bank governors (USA Treasury said the same thing), may lessen governmental fears that we need new laws immediately. Instead, a measured and transparent approach may avoid the issues we're dealing with because of rushed legislation like the Bitlicense.
Brazil Won't Regulate: Brazil has no intention of regulating crypto-assets, and says it won't follow G20 recommendations. But the bank governor has also issued statements describing the volatility of crypto as "dangerous" and the use of crypto for illicit activity as "highly likely".
Hot take: My view on this is "huh?". Possibly a red herring, but possibly a foreshadowing of things to come from some emerging countries. I will watch this closely, as Brazil is the 8th largest economy by GDP in the world.
Did I miss something important? Let me know and I'll add to the post on our blog.