With the significant surges seen with bitcoin and other cryptocurrencies during 2017, the topic of digital currencies and blockchain technology was inevitably going to be a vital topic for discussion at the annual World Economic Forum that is held in Davos.
Some of the key questions the world leaders involved in these discussions were looking at included debating whether or not they believed that cryptocurrencies are able to be properly regulated worldwide and if they aid criminals with their illegal activities.
The US Treasury Secretary Steven Mnuchin highlighted how they encourage all kinds of innovation but their foremost concern is ensuring that their financial markets always remain safe and secure.
The US Treasury wants there to be a worldwide standardized regulatory framework put in place to prevent cryptocurrencies from being used for criminal activities. This means that all platforms will need to be registered within the Financial Crimes Enforcement Network, report any financial activity that appears to be suspicious and be fully compliant with rules regarding money laundering.
A senior official from the Bank of Japan did emphasize that the implementation of a worldwide set of regulations for the trading of digital currencies is an extremely complex task.
The world leaders were all in agreeance about the need for digital currencies to be regulated, but there was a lot of uncertainty as to what the best course of action to achieve effective regulation would be.
There was also a lot of concern regarding the disruptive nature of digital currencies and how they could potentially negatively impact the economic outlook in their given countries and regions.
Theresa May, the British Prime Minister talked about her worries of the variety of ways in which these digital currencies can be used, especially by criminals.
Philip Hammond, the British Chancellor of the Exchequer, backed up these concerns by urging caution regarding bitcoin. He believes that there is a need for urgency to introduce regulations on the cryptocurrency sector before it becomes big enough that is can systematically affect the worldwide economy.
May went on to hint at a potential clampdown on the likes of bitcoin and has been paying close attention to its growth over the past year or so. She said there might need to be stricter measures implemented for digital currencies in the United Kingdom “precisely because of the way they are used, primarily by criminals.”
Leaders of the banking industry were somewhat conservative when it came to their approach to digital currencies.
The Head of the IMF (International Monetary Fund), Christine Lagarde noted the useful applications that blockchain technology can provide, but the IMF is concerned about the limited transparency and anonymity associated with cryptocurrencies as they are aspects that are attractive to the likes of terrorist fundraising and money launderers.
While there were many mixed feelings about digital currencies expressed in Davos, most of the global leaders admitted that bitcoin and other cryptocurrencies were here to stay and that necessary actions would have to be taken in order to regulate the sector.