G7 governments push for tougher crypto regulations

Top economic powers are pushing for harder crypto regulations ahead of the G7 summit. Japan is leading the way with a progressive crypto regulatory framework already in place.

G7 crypto

G7 officials are discussing crypto regulations in preparation for the next summit to be held in Hiroshima, Japan. The intergovernmental forum made up of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union as the supranational, non-enumerated member, will meet on May 19–21.

According to Kyodo News, quoting unnamed officials, member states’ leaders are bent on tightening up cryptocurrency restrictions, with the aim to increase market transparency and consumer protection. The discussions around digital assets will pick up the pace toward a mid-May session to be participated by finance ministers and central bankers that will precede the summit.

The effort to develop stricter cryptocurrency regulations is motivated by concerns about the crypto industry’s impact on global financial stability, especially so in the context of recent failures, including the FTX and Sillicon Valley Bank collapses.

Unlike other G7 members, Japan has already introduced a progressive regulatory framework for the crypto industry. Japanese law determines a token’s legal status based on its function and intended use. For example, utility coins such as Bitcoin and Ether have been classified as „crypto assets” under the Payment Services Act. Companies buying, selling, or exchanging such assets must register as a provider of Crypto Asset Exchange Services (CAES).

Japan has also regulated security tokens, representing bonds, shares, and interests, which are considered as electronically recorded transferable rights (ERTRs) under the Financial Instruments and Exchange Act. Businesses dealing with this type of assets are obliged to register as Type I Financial Instruments Business Operators (Type I FIBOs).

On the other hand, USA and Canada apply existing financial laws to digital assets, falling behind the Japanese approach. Overall, Japan seems like not a bad place to discuss the development of the legal framework for cryptocurrency.