G7 Calls for Tighter Regulation of Cryptocurrencies

After the collapse of the UST stablecoin and the LUNA cryptocurrency, G7 council members expressed the importance of speeding up the development of legislation to regulate digital assets.

Group of finance ministers of the world’s seven largest developed economies (UK, Germany, Italy, Canada, France, Japan and the US; G7) released a statement saying that cryptocurrencies must meet the same standards as the rest of the global financial system.

The joint statement calls for tougher anti-money laundering regulations and disclosure of reserves. The regulators link the advice to tighten regulation of the digital asset market with the collapse of the stablecoin TerraUSD (UST), which occurred last week:

“The G7 remains committed to the high standard of regulation of global stablecoins, following the principle of “same activity, same risk, same regulation.”

The announcement confirmed reports that the Financial Stability Board (FSB) has been asked to speed up work on regulating stablecoins amid the market shock. The message calls for the early implementation of the Financial Action Task Force (FATF) Crypto Travel Rule.

This is a controversial anti-money laundering (AML) provision currently being adopted in European Union law that contains requirements for stricter disclosure and reporting to regulators. The requirement primarily concerns reserve assets backing stablecoins.

Last week, a meeting of the G7 countries was held, which, in the light of recent events around the stablecoin TerraUSD (UST), the military conflict in Eastern Europe and the requirement to comply with US and EU sanctions, was devoted to the regulation of cryptocurrencies. Before the meeting, the head of the French central bank, Francois Villeroy de Galhau, said recent events had given the G7 a clear and troubling message about the urgent need for global regulation.