Crypto worries of developing world may get G20 attention
5 min read 14 Nov 2022, 11:26 PM ISTThe fear is that cryptocurrencies may promote dollarization but finish off other currencies
PremiumNEW DELHI : Many developing nations differ from developed countries over legitimizing cryptocurrencies globally as a payment alternative because its cryptic and borderless nature could decimate their sovereign currencies in favour of the dollar, two people aware of the development said, citing possible talking points at the G20 summit.
The concern is shared globally and is among the key issues to be discussed at the G20, particularly under the Indian presidency, these people said, requesting anonymity.
“It is natural for the US to back cryptocurrencies as they are based in that country, they wield tremendous influence, and they are mainly valued in US dollar, promoting dollarisation, which may not be acceptable for all countries. Hence, a comprehensive deliberation on this matter is expected at G20," a senior official with direct knowledge of the matter said.
Cryptocurrencies follow a decentralized architecture, making their trading hard to control across jurisdictions, even by the group of volunteers that govern most cryptocurrency development. Much of the control is exercised by exchanges, which are distributed across the world.
During her New Delhi visit on 11 November, US treasury secretary Janet Yellen, without mentioning cryptocurrency, raised the issue of digital payment systems: “It is also clear that economic integration in the 21st century requires a modern international payments system. Cross-border payments should be cheaper than they are today. They should also be faster, more transparent, and easier to access. The G20 has set out a roadmap for enhancing cross-border payments. We look forward to working with India to deliver tangible outcomes."
The second official mentioned above said India is yet to take a view on this matter and that it will be firmed up only after thorough deliberations. “One thing is quite clear: India will embrace technology. It is also in favour of a digital payment system regulated by the Reserve Bank of India. But, RBI is against allowing any digital asset to replace the sovereign currency for the country’s financial stability. Let’s see what the consensus is at G20," he said.
HT on 31 October reported that crypto-assets, including cryptocurrencies, are expected to be one of the key finance track agenda items of G20 when India assumes its presidency in December. On 1 November, finance minister Nirmala Sitharaman said digital assets would be discussed at the G20.
Amanjot Malhotra, country head, India, at digital assets exchange Bitay said, “a lot of regulations" are expected for crypto assets, especially after the collapse of FTX, a major cryptocurrency exchange.
He said “a different approach at the G20 summit" is expected on this matter by different countries.
FTX, the second-largest cryptocurrency exchange by volumes traded until recently, filed for bankruptcy earlier this month. “Cryptocurrencies are looked upon differently by different countries. Developed countries like the US are trying to regulate it as an asset class as much as they can, which is great for both retail as well institutional investors. On the other hand, we have...developing nations with weaker currencies trying to use them as a mode of transfer of value," he said.
Rajagopal Menon, vice president at WazirX, said cryptos could have a “transformative" effect in developing economies by increasing financial inclusion. “Cryptos are a big hope for the unbanked masses. An internet connection is all you need to start participating in a formalized economy."
Archit Gupta, founder and CEO of Clear (formerly known as ClearTax), said: “Cryptocurrency everywhere is used as a virtual currency, and if used as ‘payments’, it could indeed undermine the sovereign currency if unregulated."
