September 10, 2023 10:12 pm | Updated September 11, 2023 08:01 am IST – NEW DELHI
With the G-20 countries agreeing to explore a coordinated regulatory framework for crypto assets, India could wait a while longer before firming up its domestic regulations for crypto currencies, and initiate a dialogue with stakeholders on the way forward.
An outright ban on crypto currencies that was mooted by the Reserve Bank of India, and under consideration by the government, is likely off the cards, a senior government official indicated on Sunday.
“Earlier, India was contemplating a ban on it. A lot of conversation happened. In late 2021, there was a lot of interest in crypto currencies, a lot of people were buying it and even advertisements were coming in IPL matches, which we felt was not on,” the official recalled.
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“When we went deeper into regulating it, we realised one country alone cannot do it. Unless we get into monitoring and controlling every device on the Internet, which is not the kind of regulation we want in India. So whatever we do, all along this thought has been there to build a global consensus,” the official explained.
The G-20 leaders’ declaration has endorsed the Financial Stability Board (FSB) recommendations to regulate and supervise crypto-assets’ activities. It welcomed a synthesis paper from the International Monetary Fund (IMF) and the FSB, which includes a roadmap for a coordinated regulatory framework that factors in risks, including those specific to emerging markets, and pertaining to money laundering and terror financing.
The G-20 Finance Ministers and Central Bank Governors will discuss taking forward this road map at a meeting in Marrakesh next month.
‘Timely implementation is key’
“The purpose is that the risks are well-managed. Any country can allow higher risks if they want, or ban it if they like, but whatever one does, it should not go below a certain level of regulation otherwise It will lead to shifting of the trade to other jurisdictions,” the official pointed out, explaining the G-20 push for timely implementation of FSB recommendations in a consistent manner globally to avoid regulatory arbitrage.
“Each of the recommendations of the paper has to be assimilated, we have to think through what it means vis-à-vis our economy and financial system. It has to be taken up not just by the G-20 countries, but others as well. If one country says we will have a very relaxed approach towards it, it will defeat the entire purpose,” he said.
“Based on this, we need to have a conversation based on our system with our stakeholders on how we see the policy recommendations, the roadmap and what is our final view,” he underlined.
IMF managing director Kristalina Georgieva said on Sunday that “more work lies ahead” in the realm of digital money and crypto assets. “To this end, the G-20 has tasked relevant institutions to improve regulation and supervision of crypto assets — the IMF is contributing to proposals for a comprehensive policy framework; and advance the debate on how central bank digital currencies could impact the global economy and financial system,” she said.