What was said about cryptocurrency behind the closed doors of the G20?

Finance Ministers and Central Bank Governors of the world’s largest economies spoke about cryptocurrency once again, though only in general words sending the same old message: “Cryptocurrencies can bring significant advantages to the traditional economy and do not pose a global risk to financial stability.” But how much exactly from the discussed issues do really belong to the public domain and are reflected in the official four-page Communiqué? Bitcoin, IMMO, Tether and ICO Scams were actively discussed by employees of the financial ministries and departments of the top twenty behind the closed doors. We managed to obtain information from a source familiar with the matter.


The past weekend, July 21-22, the 3rd Meeting of the Finance Ministers and Central Bank Governors was held in Buenos Aires, Argentina. The 1st Meeting that touched on the cryptocurrency regulations was held earlier in March this year. Then the meeting participants did not come to a definitive decision. Argentina’s Central Bank chairman Federico Sturzenegger concluded: “In July we have to offer very concrete, very specific recommendations on not what do we regulate?” but ‘what is the data we need?’ ”


But the result of the discussion during the recent meeting was reflected in a brief conclusion in Communiqué, that is essentially identical to the one of March. G20 referred to the FATF (Financial Action Task Force on Money Laundering) asking to provide explanations by October 2018 regarding the ways FATF anti-money laundering standards should be applicable to crypto-assets.

Even though the meeting was open to the press, many of the issues discussed were left outside the public domain. On the topic of cryptocurrency, in particular, was spoken little, although we managed to learn about some of the topics that were discussed behind the closed doors of the G20.


Bitcoin, IMMO, Tether and ICO Scams


It would be logical to assume that even amongst the members of the G20 there are plenty of cryptocurrency adherents, in spite of the fact that their philosophy is fundamentally different to the idea of ​​centralization and state control. Doing their work, the Ministers, as they should, issue public statements carefully and deliberately. They represent the voice of a large system, featuring many intertwined mechanisms that are slow when it comes to making decisions. Nevertheless, it is not uncommon that discussions about cryptocurrencies take place. Mostly, about the advantages and prospects of Bitcoin – the first and foremost digital currency. While expressing a certain degree of interest to Bitcoin, as a phenomenon of financial technologies, the participants, however, refuse to believe in the further growth of its value. And that is, despite the fact that recently the billionaire Marc Lasry, speaking at CNBC, has specifically said he believes in the potential cost of bitcoin at $ 40,000 over the next few years. Similarly, such predictions have been previously shared by many other big players. However, in private conversations, the summit participants concluded that all kinds of prophecies and predictions regarding the cost of bitcoin are solely means of market manipulation.


According to our source at the G20 summit, senior central banks officials are being extremely vigilant in relation to Tether. Their main concern constitutes the fact that Tether is currently issuing a USDT digital dollar, which may not be backed by the real US dollar. Last month, an unofficial audit of Tether’s accounts was facilitated by the law firm Freeh Sporkin & Sullivan LLP, which found that USDT, in fact, did indeed have enough funds to support each 1:1 token with the US dollar. Even though Tether has passed the audit, the legitimacy of the results remains in question. Some of the meeting participants believe that Tether should be under constant US Central Bank’s supervision given the fact the asset underlying the USDT is the US dollar. Nevertheless, the Tether problem remains insignificant in the context of the global economy. Heads of financial ministries of the Group of Twenty are anticipating the development of international AML standards applicable to cryptocurrency already by October.


In particular, the need in an adequate response to the emerging ICO scam was addressed by the summit’s participants. According to a recent study conducted by the consulting company Statis Group, more than 80% of ICOs held in 2017 were fraudulent. However, the grand total that fraudsters managed to get their hands on amounted to $ 1.34 billion, which is only 11% of the entire funds raised in ICOs in 2017. The largest fraudulent projects managed to collect $ 660 and 600 million – Pincoin and Arisebank respectively, which are unique cases for the cryptocurrency sector. ICO scams are struggling to raise large funds as both market structure and conditions of competition become more and more complicated with each day. Participants in the G20 meeting remain confident that the share of ICO scams will gradually decrease as SEC took up regulation of the ICO. However, it is predominantly scam projects that tremendously discredit the sector of cryptocurrency, the participants believe.


Continuous attempts of some crypto-assets to assume the role of reserve currency for the digital market was also among the participants’ interests. In particular, not so long ago, details of the IMMO project associated with the large private banking business were made public. As it followed from the promulgated document, the IMMO FOUNDATION backs up its tokens with fundamental resources. The management of resources and the relationship of investors and project creators are regulated by a trust. Some participants of the summit believe this experiment to be interesting and continue to observe its development with curiosity. However, no one believes that there is a potential for IMMO to fully implement its idea in the near future. Nevertheless, the names involved and that appear to be known to some of the participants draws a high degree of seriousness when contemplating on IMMO.


Meanwhile, we should not expect any significant statements from the Finance Ministers and Central Bank Governors of G20 regarding the cryptocurrency market. With a high degree of probability, the next Communiqué will feature the same idea, formulated in other words. However, it is foolish to assume the summit’s participants are out of touch with cryptocurrency world or do not address the matter on a lunch break, free from the presence of journalists. State structures strive to come up with a prognosis on their possible options, thus delegating monitoring of development in the digital money market to individual employees. Sooner or later the main news will make it to the desk of important officials in the form of various reports. It is just not everyone wants to publicly share their thoughts and conclusions on the matter just yet.


Article written by: Alejandro de Olivera

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