The G7 – an international political forum comprising the seven leading economies of the world – is reportedly prepared to enforce stringent regulations in the cryptographic space in response to the recent spate of negative events in the financial sector.
Regulations Focusing on Consumer Protection
The authorities of Italy, Germany, Canada, France, Japan, the United Kingdom, and the United States of America are joining forces to create regulations for the crypto sector, with a focus on consumer protection and business transparency. This has been recently revealed by a Japanese media outlet.
The G7 countries have emphasized the need for some timely action, citing weak governance and oversight as the cause of the recent FTX collapse in November. It is widely speculated that fraudulent practices were a major contributing factor to FTX’s dramatic downfall, from a valuation of over $30 billion to bankruptcy. However, regardless of the cause, the result was multi-billion-dollar losses for the investors.
The officials have also expressed deep concerns regarding the recent banking collapses of Silicon Valley Bank (SVB) and Signature Bank, two entities that had served multiple cryptocurrency-related clients. Regulators have to shut down both due to liquidity difficulties. Furthermore, First Citizens BancShares Inc has agreed to purchase $72 billion of SVB’s assets at a discounted price of $16.5 billion, following SVB’s decision to seek bankruptcy protection in order to restructure its operations and navigate through the turbulence.
The Topic of the Meeting
The G7 will be holding a meeting of finance ministers and central bankers in mid-May to discuss the potential legislation for the future. At a subsequent gathering in Washington, representatives from the world’s twenty largest economies will provide their views on such policies. The entire version of the bill is anticipated to be released in July of this year.