Central bank governors and ministers of finance in the G7 countries are calling for the quick implementation of regulations in the crypto industry. The call came after the recent market instability that has rocked the entire crypto industry and the collapse of the Terra network.
Moreover, the entire industry is still shocked by the collapse, resulting in billions of dollars in losses.
G7 Nation Wants Swift Regulations
The policymakers from the Group of Seven (G7) met in Germany on May 18-20 to discuss how the industrialized countries could regulate crypto assets following the collapse of the Terra network.
Additionally, the group has commended the work done by the Financial Stability Board (FSB) in monitoring the risks associated with all forms of digital assets.
The group also welcomes the idea of increased cooperation by central banks worldwide to address regulatory problems arising from cryptocurrencies. In the same vein, the financial leaders want to ensure that cross-border transactions are done in compliance with the guidelines.
However, the FSB is expected to work closely with sister agencies in member countries to ensure the implementation of comprehensive guidelines for crypto service providers.
Crypto Assets to Meet Legal Requirements
The G7 calls for the rapid implementation of financial travel rules alongside disclosure and reporting regulations regarding fiat-pegged stablecoins. Meanwhile, the group has made it clear that no stablecoin will be allowed to operate within its territories without first meeting the legal and regulatory requirements.
However, the group will not hesitate to sanction any establishment or firm that fails to comply with cryptocurrency operations regulations.
In a recently released communique from the Group of Seven, the group further added its commitment to driving policy changes following the happenings in the crypto industry to safeguard consumers and investors.
Meanwhile, many countries have begun seeking urgent regulations to prevent the broader economy from imminent danger following the collapse of the Terra UST stablecoin and its native token, LUNA. The UST stablecoin meltdown triggered growing concern due to the widely held view that stablecoins are not prone to market volatility.
Moreover, it is alleged that Terraform Labs had a hand in the collapse of the network due to greed and other illicit financial dealings. South Korea is reportedly addressing the Terra issue after revealing that the CEO of Terraform Labs, Do Kwon, is to appear for questioning.
Several investigations have been launched by the South Korean authorities to find out the main reason for the Terra network meltdown, which has led to a massive loss of funds.
In addition, a class-action lawsuit was also slammed on Do Kwon by affected investors in Korea who are seeking the forfeiture of the CEO’s property. There is also speculation that Kwon planned to jet out of the country before being arrested by security operatives.
The United States Treasury secretary, Janet Yellen, has, over the past week, called on the U.S. Congress to regulate the circulation of stablecoins in the U.S.