According to a recent report from India’s finance minister, India has now gained support from the U.S. and IMF to draft its first-ever crypto law.
India has seen a surge in cryptocurrency trading and investment in recent years. While the potential of cryptocurrency and blockchain technology is widely recognized, the Indian government has expressed concerns about the risks associated with cryptocurrencies, including money laundering, fraud, and terrorism financing. As a result, the Indian government is now exploring ways to regulate the cryptocurrency industry in the country.
According to a recent report from the Indian Government, at the current G20 Presidency, India has asked the IMF and Financial Stability Board (FSB) to collaborate on a technical document concerning crypto assets. This paper will aid in developing a unified and thorough approach to regulating these assets.
India Finally Pushes Toward Crypto Bill
During the two-day talks of the Group of 20 (G20), India’s efforts to regulate cryptocurrencies received backing from the International Monetary Fund and the United States. The Indian government has called for a worldwide collaborative approach to addressing the challenges posed by digital currencies like bitcoin. To facilitate this, India’s finance ministry organized a seminar for G20 members to discuss the development of a shared regulatory framework.
According to a statement from the Indian finance ministry, the collaborative paper from international organizations is anticipated to be presented at the 4th Finance Ministers and Central Bank Governors Meeting in October 2023.
The report states, “To complement the ongoing dialogue on the need for a policy framework, the Indian Presidency has proposed a joint technical paper by the International Monetary Fund (IMF) and the FSB, which would synthesize the macroeconomic and regulatory perspectives of crypto-assets. This would help in the formulation of a coordinated and comprehensive policy approach to crypto assets.”
IMF And FSB To Integrate With The Indian Crypto Regulatory Framework
According to the statement, the IMF’s discussion paper, policy seminar, and joint paper with the FSB will collectively address macro-financial and regulatory aspects of crypto assets and help establish a worldwide agreement on a unified and thorough policy approach to these assets.
Although the crypto world is rapidly changing, there is currently no comprehensive global policy framework in place for digital assets. As crypto assets become increasingly intertwined with traditional finance and as their volatility and complexity persist, policymakers are advocating for stricter regulation.
In an interview with Reuters during the G20 meeting in Bengaluru, U.S. Treasury Secretary Janet Yellen emphasized the importance of establishing a robust regulatory framework for crypto assets. However, she also stated that the United States had not proposed any prohibitions on these assets.
Yellen said, “We haven’t suggested outright banning of crypto activities, but it is critical to put in place a strong regulatory framework. We’re working with other governments.”
During the event, Tommaso Mancini-Griffoli, a speaker from the IMF, presented a discussion paper that discussed the potential effects of crypto adoption on a country’s economy, internal and external stability, and financial system structure.
Mancini-Griffoli acknowledged that while crypto assets have the potential to offer benefits such as faster cross-border payments, more integrated financial markets, and increased financial inclusion, these advantages have yet to be fully realized.
He also emphasized that private sector entities cannot guarantee interoperability, safety, and efficiency, and therefore, the critical digital infrastructure and platforms for ledgers should be considered a public good.
Furthermore, Mancini-Griffoli identified information gaps in the global crypto asset landscape and highlighted the need for a greater understanding of the interconnections, opportunities, and risks related to these assets under the auspices of the G20.
The Indian government, led by Prime Minister Narendra Modi, has been deliberating on drafting a law to regulate or potentially prohibit digital currencies for several years but has now prepared to reach a definitive decision. However, on the other hand, the Reserve Bank of India remains on the statement “that cryptocurrencies should be banned”, as they are similar to a Ponzi scheme.
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