‘India to decide its position on crypto in coming months’ | Mint

‘India to decide its position on crypto in coming months’

Ajay Seth, secretary of the department of economic affairs. (Bloomberg)
Ajay Seth, secretary of the department of economic affairs. (Bloomberg)

Summary

India will evaluate recommendations from the IMF and the G20's risk watchdog on regulating crypto assets before deciding its stance.

New Delhi: India will evaluate the recommendations made in a paper authored by the International Monetary Fund (IMF) and the G20’s risk watchdog, the Financial Stability Board (FSB), outlining a roadmap for regulating crypto assets and integrating digital assets into digital financial systems before deciding its stance, Ajay Seth, secretary of the department of economic affairs, said.

On the sidelines of the G20 summit on Sunday, Seth said the leaders have endorsed the required regulations, oversight and supervision for unbacked crypto assets.

“Keeping that framework in mind, we have to analyze our own position with reference to what the leaders have agreed," Seth said. “Given this, we will decide our position in the coming months."

Seth emphasised that emerging economies face higher risks from crypto assets, especially unbacked ones. “Given the risk, it (the synthesis paper) has a clear recognition that risks are higher for emerging economies," Seth said.

He added that a clear understanding among G20 leaders has been reached on the building blocks required for a good set of regulations for crypto and the tentative time frame for its implementation.

“Based on the consensus that we have been able to build, we will be considering these recommendations carefully and considering our own policies and thereafter take further action," Seth said.

The IMF and FSB joint synthesis paper, which was released on 7 September, has stated that a blanket ban on crypto assets may be hard to pull off, while noting that increased adoption of these assets could undermine monetary policy transmission.

The paper also called on nations to implement the Financial Action Task Force’s anti-money laundering and counter-terrorist financing standards for virtual assets and virtual asset service providers.

It also recommended developing a common framework and collection of “test data" on digital money and crypto assets for being used as a means of payment that are enabled by fintech firms.

However, India expects a lot more discussions on the recommendations made by the synthesis paper and on the ways to implement them in a faster, swifter and more comprehensive way, Seth added.

The Reserve Bank of India had earlier called for a complete ban on cryptocurrencies.

The way forward will be decided following the meeting of G20 finance ministers and central bank governors in Marrakesh, Morocco, scheduled in October.

Seth said the current global economic growth is being influenced by high inflation and slowing global trade. Monetary tightening due to high inflation, especially in the developed economies, will impact overall global growth, he said.

“Global trade has been on a low key and high growth rate that was earlier seen is not visible (anymore)," he said.

“On the goods side, the lower global trade does impact us (India). At the same time, the services exports are doing extremely well. So, it will have limited effect," Seth added.

Meanwhile, with respect to discussions on the Climate Resilience Debt Clause (CRDC) at G20, many member countries felt the need for more technical work, a senior government official said.

“While a few countries have said that the time has come to take decisions on CRDC, other countries are of the opinion that more discussions need to be done," the official added.

On 9 September, after G20 leaders reached a consensus on the summit declaration, finance minister Nirmala Sitharaman said that India has “walked the talk" to achieve its finance track objectives under its G20 presidency.

The key achievements of the finance track under the Indian G20 presidency include a plan to strengthen the multilateral development banks to address shared challenges, laying down the building blocks for a globally coordinated policy and regulatory framework for crypto assets, gaining financial inclusion and productivity gains through digital public infrastructure, debt resolution for lower and middle income countries, and financing cities of tomorrow.

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