Global cooperation key to countering threats like crypto: FM Sitharaman

  • A responsible financial ecosystem isn’t possible without global collaboration, the finance minister said at the Global Fintech Fest in Mumbai

Shayan Ghosh
First Published5 Sep 2023
Union Finance Minister Nirmala Sitharaman
Union Finance Minister Nirmala Sitharaman

Mumbai: Global cooperation and a framework are essential to counter threats emanating from areas such as cryptocurrencies, Finance Minister Nirmala Sitharaman said on Tuesday. “As much as you build firewalls, there are more and more newer ways in which attacks are being made. Crypto (is a) threat as well as an opportunity,” Sitharaman said at the Global Fintech Fest in Mumbai.

Crypto has long been a thorny issue in India. RBI governor Shaktikanta Das has voiced his concerns about the digital tokens several times, saying they pose threats to financial stability. The finance ministry notified in March that the exchange, transfer, safekeeping or administration of cryptocurrencies would be under the ambit of the Prevention of Money Laundering Act (PMLA).

Sitharaman said, “India’s Presidency has put on table, in the G20, issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets. Active discussions are happening. Content rich papers from institutions International Monetary Fund (IMF), Financial Stability Board (FSB) and Organisation for Economic Co-operation and Development (OECD) are all being discussed on various issues.”

The IMF and FSB have released their synthesis paper on crypto, she said, adding that a responsible financial ecosystem isn’t possible without global collaboration. She said there is a need to talk about various threats, such as physical border threats, cyber threats and crypto threats. She added that fintech companies should invest heavily in robust security with advanced encryption and other measures to protect financial transactions and other user data.

“A secured system is what will build trust and therefore that is a must for the financial ecosystem to truly flourish. India can lead in making the financial ecosystem inclusive, resilient and sustainable,” she said, adding that global cooperation is the key to making this possible.

Sitharaman said since financial technology transcends borders in an interconnected world, forming cross-border partnerships is absolutely crucial. Collaborative ventures, she said, could open up a vast and diverse customer base, and accelerate market participation and penetration.

She said the annual global cross-border payments are estimated at $20 trillion, with $120 billion in transaction costs. India, she added, is the largest remittance receiver with about $100 billion worth of remittances in 2022.

“The high remittances are a motivating factor in our pursuit of enhancing cross-border payment arrangements. Enhancing cross-border payments has been India’s priority, also in the G20 we are talking about it,” she said.

Citing the size of India’s market, she urged the fintech industry to take the lead in cross-border payment systems on the back of India’s successful experience in digital payments.

Sitharaman also said that income tax returns (ITR) data released in August showed the increasing formalisation of the Indian economy.

“Each tax bracket – the tax slabs, I mean – has seen a minimum three-fold increase in tax filing. Some even achieved a nearly four-fold surge. We are in Mumbai, so, contextually I like to highlight that Maharashtra continues to be the leader,” she said, adding that other states are moving up with respect to ITR filings. She said the number of demat accounts has increased 2.5 times from 41 million in 2019-20 to 100 million in 2022-23.

“A record number of mutual fund systematic investment plans (SIPs) are being registered, which helps in generating long-term wealth. With a monthly flow in the mutual fund industry through the route reaching an all-time high of 15,245 crore in July 2023, assets under management of the Indian mutual fund industry have increased tremendously in the past decade,” she said

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