If you’ve been watching the Bitcoin market lately, you’ve noticed that the digital currency’s recent rally has been attributed to the fact that the Financial Stability Board (FSB), a major international regulatory body, delivered a letter to the G20 finance ministers and central bank governors declaring that Bitcoin does not post a “systemic risk.”  The overall market sentiment seems to be that the FSB’s declaration serves as a positive signal for the currency, providing a basis for the $1,000+ rally in Bitcoin’s value arising just as the G20 meets to discuss cryptocurrency policy in Buenos Aires.

However, as I write in an op-ed for Cointelegraph, if this was the spark for the Bitcoin rally, traders are almost certainly reading (way) too much into the FSB’s comments – a trend apparently continuing in the aftermath of comments from G20 participants that cryptocurrency discussions were “productive.”

For all the attention generated by the fact that the FSB did not advise banning cryptocurrencies, markets ignored the real action in the letter, in which authorities made some pretty clear indications that more regulation is coming.  Specifically, the letter states:

“Crypto-assets raise a host of issues around consumer and investor protection, as well as their use to shield illicit activity and for money laundering and terrorist financing. […]

Relevant national authorities have begun to address these issues. Given the global nature of these markets, further international coordination is warranted, supported by international organisations such as CPMI, FATF and IOSCO.”

These comments do not represent a détente in cryptocurrency regulation. Instead, the FSB is signaling that some of the efforts taken to combat fraud in the United States and elsewhere will be implemented on an increasingly international dimension.

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