REFLECTIONS

The G20’s name is something of a misnomer since it comprises 19 sovereign countries, the European Union, and the African Union. With its members representing around 80% of global GDP, 75% of global exports, and 60% of the earth’s population, however, it is to all intents and purposes the world government. While many citizens dislike its agenda, they don’t dispute its influence. And when the group assembled in 2019, they had plenty to talk about.

Rising geopolitical tensions, exacerbated by an escalating trade war between the United States and China, were threatening the international order of cooperation that had defined the post-war period and been the bedrock of global prosperity. The IMF's Managing Director, Christine Lagarde, noted that the tariffs were holding back the world economy. As a result, the primary focus of the Japanese G20 Presidency that assembled in June 2019 was to reinvigorate international cooperation and manage the immediate risks to global growth.

Bitcoin wasn’t top of the agenda. At least not when preparations were laid for the summit months in advance. At the start of the year, BTC was trading at around $3,800 but it then embarked on a powerful rally. By the end of June, as G20 leaders prepared to meet in Osaka, its price had soared to almost $13,800. This mini bull run was significant for two reasons that directly relate to the G20's deliberations.

First, it thrust digital assets back into public consciousness after the 2018 crash had led some to dismiss cryptocurrency as a fad. Second, a compelling narrative began to take hold within the crypto community and certain segments of the financial media: that Bitcoin was functioning as a form of “digital gold,” a hedge against the very economic uncertainty and geopolitical turmoil that preoccupied the G20.8

The price of Bitcoin appeared to react positively to escalations in the US-China trade war, fuelling the argument that it was a non-sovereign safe-haven asset that formed an alternative to the traditional financial system. While the empirical validity of this narrative was debatable, its existence created an underlying ideological tension. It positioned a decentralised, stateless asset as a potential beneficiary of the failure of international cooperation – the very problem the G20 was convened to solve.

Bitcoin Is Back on the Menu

In the run-up to the G20 summit, various apparatchiks including finance ministers and central bank governors met in advance to discuss issues that pertained to their own fields of expertise. A few weeks ahead of the main event, this mini-summit took place in Fukuoka on June 8-9 and it was here that digital assets came under the spotlight.

Jason Hsu, who represented Taiwan’s crypto community, was present at the gathering. He recounts calling on governments “to treat blockchain as a tool for financial resilience, not just speculation, and to recognise that if democracies don’t lead, authoritarian systems will set the standards instead.”

He adds: “The key was reframing Bitcoin in terms policymakers already care about: financial inclusion, resilience, and national competitiveness. I showed how Bitcoin empowers the unbanked, strengthens systemic security, and positions democracies to lead in the digital economy.”

The communiqué ultimately delivered by those in attendance, for the consideration of the G20 policymakers, concluded that while risks related to consumer and investor protection existed, crypto assets did not pose a threat to global financial stability at that time. Consequently, they recommended a policy of continued monitoring and information sharing rather than immediate, coordinated regulatory action.

This was all pretty dry stuff to be expected from government ministers tasked with shuffling papers and talking policy. Still, from the perspective of the cryptocurrency community, it was about as good an outcome as could be expected. No concerted effort to clamp down on the industry: just a few platitudes and a casual kick into the long grass. They’d deal with digital assets, but not today.

At least that’s how it seemed at the time. But in the days following the G20 gathering, the blockchain industry was rocked when Facebook unveiled its proposal to create a global digital currency called Libra. It wouldn’t require multilateral coordination to address this threat to U.S. dollar hegemony – American lawmakers would single-handedly render Libra dead on arrival. The message was clear: any major companies that attempted to stray from their lane by dabbling with cryptocurrency would be mercilessly swatted.

If there was one upside to all of this, it was that Bitcoin had evaded all attempts to rein it in. It remained as decentralised and uncensorable as ever – something that even the most powerful financial regulators couldn’t impact.