In the last two budgets that she has presented for the world’s fifth largest economy, Nirmala Sitharaman, India’s finance minister has been tough on cryptocurrencies. These developments took shape in India attempting to build consensus towards banning cryptocurrencies altogether, when it took the presidency of G20.
Nevertheless, these attempts to build consensus did not materialize as the member nations found themselves in opposition to the idea. But all member nations were in agreement over the matter that cryptocurrencies should be dealt with stronger international and local regulations at all places in the world.
Each of the G20 member nations has the opinion that the international debate over the cryptocurrency ban should continue. The final outcome document states that the need of the hour is to have a policy approach in place when dealing with cryptocurrency assets. This policy approach needs to be comprehensive and coordinated. While the policy approach needs to cover regulatory and macroeconomic perspectives, it also needs to oversee the entire set of risks that crypto-assets pose.
The present date is characterized by a reasonable bit of dissatisfaction among cryptocurrencies that prevails in the public. Some contemporary developments stand behind the cause. One of the most important among them is the November collapse of FTX, resulting from which crypto assets such as Bitcoin had shaken all across the world.
Cryptocurrency regulation and India
Since 2020, the hon. the prime minister of India, Sh. Narendra Modi has time and again specified that his governance is willing to regulate cryptocurrencies. Another noteworthy development in this regard, which had also taken place in 2020 was that first, the GoI banned the Central Bank from providing services to cryptocurrency traders. Then, the Supreme Court of India struck down the ban.
As per the Reserve Bank of India (RBI), the use of virtual economic assets puts forth a risk on the stability of the overall financial system of the country. A few of the constituents of the G20 find themselves in support of the hypothesis.
France and Canada support India on crypto regulation
Nirmala Sitharaman has stated on 25th February that the central bank governor of Canada has cautioned that crypto assets have been granted the regulatory seal of approval. This should definitely not happen without a well thought out framework for implementation and approach.
France also finds itself on the same pedestal when it comes to posing regulations on cryptocurrencies. Bruno Le Maire, the French Minister of Economy and Finance has told reporters on 24th February that for several years at a stretch, France has been an advocate of cryptocurrencies. The focus, at this hour, Le Maire specified, should be on protecting financial stability and consumers.
India garners the support of the US and IMF on crypto regulation
On Saturday, 25th February, India garnered the support of the US and International Monetary Fund (IMF) in terms of regulation of cryptocurrencies. The development comes into the picture as financial chiefs of G20 are wrapping up the talks that lasted for two days.
At the high-level G20 meet, India has specified that it seeks a collective effort at a global level for countering the problems posed by different cryptocurrencies, such as Bitcoin. As expressed by the finance ministry, the key motive of holding the G20 meet was to build consensus over building a common framework for cryptocurrency regulation.
As per U.S. Treasury Secretary Janet Yellen, even as it bears utmost importance to put in place a robust regulatory framework for cryptocurrencies, the US is against any explicit bans. Yellen further expressed that the US is working with other governments towards the matter.
This statement, surprisingly, comes in contradiction of the statement made earlier IMF Managing Director Kristalina Georgieva. Georgiva had told the reporters earlier, after her meeting with India’s FM Nirmala Sitharaman that banning cryptocurrencies is going to be one of the options.
It is noteworthy that Modi government has been attempting to ban cryptocurrencies altogether since long, but never came up with a final consensus. As per RBI, while cryptocurrencies are akin to a Ponzi scheme, they should be banned.
IMF, under such circumstances has maintained the opinion that cryptocurrencies should not be granted a legal tender status. This was even before the G20 meet had got underway. The aforementioned point was the first point of the nine-point action plan that IMF had laid on Thursday, 24th February.
IMF has expressed that for the authorities from across the world, efforts on this line have become a priority. The key reason why such recommendations have come into the picture is that a host of crypto assets and exchanges have collapsed in the past couple of years. This goes to show, fund expressed, that doing nothing is no longer an option and can cause tremendous damage.
What does the future hold for cryptocurrencies?
Reserve Bank of India (RBI) Governor Shaktikanta Das has explicitly stated that as per some members of G20, there should be a complete ban on cryptocurrencies.
BuyUcoin CEO, Shivam Thakral has specified that there are some critical points that seek attention on the behalf of policymakers as far as cryptocurrencies are concerned. The first among them, Thakral says, is to define cryptocurrencies as security/commodity/asset class. Regulating fiat pegged stablecoins is equally important, and so is having licensing regime for crypto exchanges. There also needs to be regulatory monitoring in place for companies involved in the business of digital assets.
Thakral added that India is currently positioned to lead efforts in the terms of global crypto regulations. This is the best time to adopt a stance that is supportive to the industry.
This is one of the top ways by which India can help achieve its $5 trillion economy dream in this decade itself.
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