Take lead on crypto regulation: finance minister to IMF MD

  • Sitharaman also pressed for the timely conclusion of the 16th general review of quotas that would address inequity and imbalances in the global economy

Dilasha Seth
Updated8 Sep 2022
Union finance minister Nirmala Sitharaman.
Union finance minister Nirmala Sitharaman.

Union finance minister Nirmala Sitharaman urged the international monetary fund (IMF) to play a lead role on the regulation of crypto assets and defining a globally coordinated approach on the issue. It was raised during a meeting with the IMF managing director Kristalina Georgieva in New Delhi on Wednesday.

Georgieva met Union FM to discuss India’s upcoming G20 presidency and IMF’s support to India for the presidency.  

Sitharaman had during the spring meetings of the IMF and World Bank in April called for a global framework to regulate cryptocurrencies, warning of risks pertaining to money laundering and terror financing for all countries. She flagged that no country could handle these risks alone and these could only be regulated when countries come on board together.

India introduced a 30% tax on crypto assets with effect from April 1. Besides, a 1% TDS on payment of virtual assets exceeding 10,000 in a year and taxation of such gifts in the hands of recipients will be applicable from July 1.

Sitharaman also pressed for the timely conclusion of the 16th general review of quotas that would address inequity and imbalances in the global economy.

Georgieva agreed with the FM that for the IMF to remain relevant, it is important that a general review of quotas is reached to reflect the changed status of emerging market economies in the world order, according to the release by the ministry of finance.

IMF quotas, which are the primary source of IMF funds, determine voting shares. The quotas are supposed to be reviewed every five years, but can be delayed.

 
India's quota is 2.76% and China's is 6.41% while the US' quota is 17.46%. Quotas are decided based on a country's GDP, its economic openness, international reserves, and economic variability.

 

The two discussed concerns of key downside risks to the global economy, and the cross border effects due to the geopolitical situation and tighter financial conditions. They also recognized that the effect of increase in global inflation due to rise in food and energy prices and international debt has impacted low income countries the most.

Sitharaman reiterated the importance of coordinated policy measures and multilateralism for mobilizing adequate financial resources for climate action, emphasizing that committed funds by the developed countries is yet to become available. She further states that carbon pricing may not be a feasible policy tool climate action.

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