The G20 plans to regulate cryptocurrencies “in line with FATF standards” according to a summary of the recent meeting in Buenos Aries. This provides the world with the latest glimpse of what global regulation for crypto assets could look like. They also discussed the impact of cryptocurrencies on taxation efforts, with an update due in 2019 and a final report expected in 2020.
The Bitcoin Question
Digital assets were raised as a potential G20 topic by French Finance Minister Bruno Le Maire, who said in December 2017 that he wanted to add the “question of Bitcoin” to the agenda for the 2018 meeting in Argentina. He seems to have been successful in doing this, as the joint declaration signed by all twenty members references digital assets without stating any by name. On the subject of regulations, the agreement states:
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.
The FATF (Financial Action Task Force) regulations were drawn up in 2012, they specify 40 measures world governments can take in order to combat money laundering and the financing of terrorism and proliferation. How different countries would implement these rules is of course open to governmental interpretation, but those who see Bitcoin as a financial mechanism impervious to state intervention may get a nasty shock when those rules are applied to crypto assets.
Taxation Woes to Continue for Users
On the subject of taxation, the agreement states:
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 with an update in 2019 and a final report by 2020.
While the words ‘cryptocurrency’ and ‘tax’ haven’t often sat well together in the past, the implementation of tax rules surrounding digital assets might actually be welcomed by those involved in digital asset trading. The authorities who are confused about how to tax them could also benefit.
The act of calculating tax on crypto assets is a minefield that often requires lengthy research, guesswork, and software. So, a more black and white approach would be another step in the direction of removing the stigma surrounding digital assets and those who operate within the space. It seems however that until the Riyadh conference in 2020 at least, we’ll still be scratching our heads and thumping our calculators.