The Indian government intends to establish cryptocurrency regulations through extensive discussions at both the global level and with domestic stakeholders, as stated by Economic Affairs Secretary Ajay Seth in an interview with CNBC-TV18. He emphasized that India’s position on cryptocurrency will be determined in the coming months based on the consensus and recommendations achieved through these discussions.
Regarding the Reserve Bank of India’s (RBI) proposed ban on cryptocurrency, Seth clarified that the issue is not a binary decision. Instead, it involves establishing a framework for assessing the risks associated with cryptocurrencies and determining sound policies. India’s position will be formulated in alignment with global leaders’ decisions and will be based on this framework.
Seth also highlighted the substantial progress made within the G20, particularly by organizations like the International Monetary Fund (IMF), Financial Stability Board (FSB), Financial Action Task Force (FATF), and the Bank for International Settlements (BIS), in establishing a comprehensive understanding of cryptocurrency risk assessment.
The IMF and FSB have recommended a coordinated global policy approach to address cryptocurrency risks, emphasizing that a blanket ban is not the solution. They have laid out a roadmap and suggested minimum regulations for all countries to adopt.
India has advocated for global cryptocurrency regulation to combat tax evasion and fund round-tripping. While India’s central bank, the RBI, has called for a complete cryptocurrency ban, reaching a global consensus on minimal regulations is seen as a more practical approach.
The official also noted that there are risks associated with cryptocurrencies, particularly concerning entities that serve as depositories and clearing systems. The purpose of regulation is to manage these risks effectively. If all countries agree on the same regulation, it eliminates the possibility of regulatory arbitrage.
The fourth meeting of G20 finance ministers and central bank governors is scheduled to take place in October 2023 in Morocco, where discussions on cryptocurrency regulations will continue.
The New Delhi declaration issued at the recent G20 leaders’ summit endorsed the FSB’s high-level recommendations for regulating cryptoassets activities and markets, emphasizing the need for timely and consistent global implementation to avoid regulatory arbitrage. The leaders also welcomed the IMF-FSB Synthesis Paper and roadmap for a coordinated and comprehensive policy framework for cryptocurrencies. The discussion on this roadmap will continue at the G20 finance ministers’ meeting in October 2023.