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UPDATE 1-Japan central bank head says G20 to reaffirm need for free trade

* Don't expect protectionism to spread globally - BOJ Kuroda

* Adds protectionist steps hurt countries that implement them

* Kuroda warns against over-regulation on cryptocurrencies (Adds quotes, detail)

BUENOS AIRES, March 19 (Reuters) - Group of 20 finance leaders will likely reaffirm their shared understanding on the importance of free trade, Japan's central bank governor said, rebuffing worries that U.S. President Donald Trump's import tariffs could spark a trade war.

While refraining from singling out the United States, Bank of Japan Governor Haruhiko Kuroda said protectionist steps would backfire for countries that implement them by disrupting their imports of necessary goods.

"I don't think protectionism will spread globally," Kuroda told reporters on Monday upon arrival for the G20 finance leaders' meeting, adding that the global community shares a common understanding on the need to protect free trade.

"The G20 will likely continue calling on the importance of free trade," Kuroda said.

Worries about the potential for a U.S.-China trade war and frustration over Trump's import tariffs threatened to dominate the G20 meeting, which is also set to debate cryptocurrencies and the global economic outlook.

Several G20 officials, including the finance ministers from host country Argentina and Germany, said they will insist on maintaining G20 communique language emphasizing "the crucial role of the rules-based international trading system."

But it was unclear whether that language will stand given how Washington succeeded in watering down stronger language resisting protectionism at a G20 meeting in Germany a year ago.

On cryptocurrencies, Kuroda said there was active debate among G20 policymakers on how to strike the right balance between the need to protect consumers from theft, and the risk of killing innovation with excessive regulation.

"There may be areas where regulations could be beefed up, such as consumer protection and money laundering. But we also need to make sure we don't stifle new technology," he said. (Reporting by Leika Kihara Editing by Andrea Ricci)