Crypto regulation is the key focus area of the recent G20 summits under India’s presidency. Authorities are mulling over whether to ban or handle the fast-paced industry.
India’s Finance Minister Nirmala Sitharaman called for a coordinated approach to regulate cryptocurrency.
During the recent G-20 meeting, the minister discussed the effects of policy uncertainty on macroeconomic and financial market outcomes, urging global governments to step up to reform regulatory oversight.
The G20 Finance Ministers and Central Bank Governors (FMCBG) meeting took place on Feb. 24–25. This year’ discussion looped back to the opportunities and risks linked to technology innovations.
The minister underlined the importance of understanding risks associated with crypto assets.
Risk assessment will lay the groundwork to regulatory approaches. A coordinated effort, as stated by the minister, will help develop standards to oversee the potential risks of crypto assets while embracing their benefits.
RBI has Ideas
The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said at the conclusion of the G20 finance meeting that some of G20 Summit members could consider an entire ban on crypto.
For a while, the RBI asserted for a complete ban on the use of private digital assets.
The governor said that although it is still too early to discuss them, there might be additional options for adjusting assets. Das noted that while the RBI strongly favored a complete ban, there are opposing views that the asset should be regulated to assess the risks involved.
Commenting on this topic, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said that crypto regulation would be prioritized.
However, the agency affirmed that an outright ban wouldn’t be excluded if cryptocurrencies pose a serious threat to financial stability. The IMF has been working with the Financial Stability Board (FSB) to set a legal framework for cryptocurrency.
The U.S. also prefers to regulate the nascent industry rather than imposing an outright ban.
In an interview with Reuters, the U.S. Treasury Secretary Janet Yellen said that the country hasn’t “suggested outright banning of crypto activities, but it is critical to put in place a strong regulatory framework.”
Regulation of digital currencies has received increased attention following the catastrophic collapse of the FTX exchange and other well-known enterprises in this area, as well as the drastic drop in the market capitalization of cryptocurrencies.
The Indian government is working on cryptocurrency legislation that could outlaw specific cryptocurrency-related activities and establish rules for central bank digital currencies.
India focuses on taxation in addition to sector regulations. Finance Minister Sitharaman stated earlier this month that the nation should impose a 30% tax on income from the transfer of digital assets.
India Promotes Digital Rupee
India has a reputation for being tough on Bitcoin and other cryptocurrencies. The country’s central bank has warned that allowing these assets to expand uncontrollably could lead to the next financial corruption.
India’s central bank is pushing to introduce a digital version of the national rupee. A CBDC pilot campaign targeting retail use was kicked off in December 2022 in select cities.
Consumers are able to transact in digital rupees through apps and e-wallets.
Nirmala Sitharaman earlier stated that the country plans to release a digital rupee in 2023, which she sees as a significant boost to India’s digital economy.
The minister did not go into depth about how the digital rupee will work, but she did say that it will leverage blockchain technology and other technologies.
Many central banks throughout the world are pondering issuing digital versions of their own currency.
China is undoubtedly leading the way in the global development of CBDCs. Since late 2020, Beijing has been testing real-world use of the digital yuan, with the objective of broadening its availability to more customers this year.