TOKYO — The Group of 20 major economies are expected to reach an agreement to create a registry of cryptocurrency exchanges, bolstering oversight to address a regulatory patchwork that can be exploited by money launderers.
Finance ministers and central bankers from the bloc will discuss challenges surrounding digital currencies, including money laundering and customer protection, at their meeting in the Japanese city of Fukuoka on June 8-9.
Virtual currencies enable cross-border transactions without going through banks. But this convenience means they are often used to transfer illicit funds and launder money. Some currencies in particular are highly anonymous and cannot be traced back to past transactions.
Japan, this year’s G-20 host, has taken the lead in restricting these instruments. The country became the first to create a registry for cryptocurrency exchanges in April 2017, and it also has experience enforcing regulations, as it did after hackers stole over $500 million from Coincheck.
But not all countries are on the same page. China, for example, bans cryptocurrency trading altogether. And tough regulations have no meaning if traders simply move to nations with more relaxed rules.
In order to help countries work together to curb illegal activities, the Financial Stability Board, an international body of financial regulators, published a directory of cryptocurrency regulators in April, which will be submitted to the G-20.
The Financial Action Task Force had said in October 2018 that virtual asset service providers ought to be subjected to anti-money laundering regulations. “They should be licensed or registered and subject to monitoring to ensure compliance,” the intergovernmental policymaking body said in a statement.