Headline: What has the G7 agreed upon in cryptocurrency?
Body: OK, don’t yawn. Unless, of course, you’re taking in extra oxygen to support you in a frenzy of extreme interest; That would be OK. Cryptocurrency is an international thing (in a decentralized world, Banks and governments are not involved) so, it is natural that countries might try to regulate this product in concert with their international partners. So, recently, I had heard that the G7, a major partnership, was trying to agree upon a rubric that could be used by all members. So, what decisions were made, and why does it matter? Let’s take the 2nd part first. The G7 matters because it is so big, pure and simple. So, let’s look at just what the G7 is.
What exactly IS the G7 and what is it supposed to do?
The G7 is an informal bloc of industrialized democracies—the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom—that meets annually to discuss issues such as global economic governance, international security, and energy policy. Proponents say the forum’s small and relatively homogenous membership promotes collective decision-making, but critics note that it often lacks follow-through and excludes important emerging powers. At first, this partnership was the Group of Eight, and included Russia, but Russia was suspended in 2014 after their annexation of Crimea in Ukraine. The E.U. is a “nonenumerated” member, but all members in aggregate, represent 45% of the world economy. So, what happens here , in no way, stays here. (For its own part, the U.S. has experienced some rough waters in this group when former President Trump very publicly challenged the organization on both trade and climate change.) Interestingly, China seems motivated to join the G7, but many members point out that the G7 umbrella is only for “stable democracies.”
So, the question that must be asked is, “who cares?” The G7 is a very informal group lacking the central structures of NATO or anything similar. I have read many different accounts of this, but at root, it seems that the big deal is that as part of the G7, your country can effectively help to promote a solution that would in turn, benefit your own country. For example, take trade treaties between the U.S. and the EU; two very good friends. By being a part of the G7, the Europeans would likely get to affect the language used in the treaty to be written. In effect, they get to be “in the room” as the U.S. first begins to consider what it most wants from this treaty. Hence, when the final treaty comes out, the EU has already effectively ghostwritten the draft. This is important to diplomacy. Despite this, many diplomats point to the importance of the G20 to be much more salient in this environment. Currently, there is no more vociferous debate than that around Ukraine.
What does this mean for cryptocurrency?
OK, first, understand that all countries involved, are deeply confused by the cryptocurrency debate; They do want to take advantage of cryptocurrency, but they don’t want to be stuck with egg on their collective faces, if the entire crypto space just shuts down. This is why it is so vital that the G7 hammer out a plan at their meeting in May, as collective action is the only realistic way to conquer these challenges. As of now, Japan has quite a significant regulatory framework on cryptocurrency, and the EU has a regulatory framework ready to “go live” in 2024. This is the pressure building behind the G7. In response, one of the financial arms of the UN, the FSB, has volunteered to help develop a cryptocurrency rulebook. The outfall of all this is that we might have a global policy as early as July 2023.
The Verdict
Einstein has a quote that I always think of in this regard: “We can not solve our problems with the same level of thinking that created them.” I admit that they don’t yet have the specifics to share but, I am encouraged that this planning is happening within the G7. Since NATO is such a formal group, the G7 allows for experimentation and breaks down fears that stall NATO and similar institutions into inaction. To be clear, given the broad reach of decentralized finance, larger agreements within the UN or similar assemblies will be necessary to foster efficient transactions that are easy to execute. I will return to this topic later in the summer of 2023. i
REFERENCES
https://cointelegraph.com/news/g7-to-collaborate-on-tighter-crypto-regulation-report
G7 nations set to push for stricter cryptocurrency regulations at Japan summit in May (yahoo.com)
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