Regulation
India to follow G20 policy on cryptocurrency regulation: Finance Ministry
Union Minister of State for Finance Pankaj Chaudhary said India is assessing the country-specific characteristics and risks emerging with crypto assets in line with the International Monetary Fund (IMF) and the Financial Stability Board (FSB). summary what was accepted by G20 leaders during India’s G20 presidency in 2023. Chaudhary was responding to Lok Sabha MP YS Avinash Reddy question During the monsoon session of Parliament, Reddy asked if India was planning to hold broader discussions on regulating cryptocurrencies.
Chaudhary said India, along with all other jurisdictions, needs to engage with the G20 and other standard-setting bodies on crypto asset regulation, indicating that the position paper could be the primary policy document framing cryptocurrency regulation in India.
Economic Affairs Secretary Ajay Seth said Money Control India plans to release a discussion paper on its policy position on cryptocurrencies before September. India may consider adopting the IMF-FSB framework, he said. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) will also participate in the discussion.
India propose The paper, drafted during his G20 presidency, aims to “capture the macroeconomic implications and widespread adoption of cryptocurrencies in the economy.” The paper concludes with a “G20 Cryptoasset Roadmap” that provides tentative recommendations and timelines for regulating cryptocurrencies.
The synthesis calls for addressing the macroeconomic and financial stability risks posed by cryptocurrencies. Key recommendations include not using cryptoassets as a jurisdiction’s primary currency and establishing a clear tax regime for cryptocurrencies. It also calls for sharing cross-border information on tax compliance to ensure monetary stability.
The note also offers suggestions for maintaining the financial stability of a jurisdiction. It calls for entrusting the responsibility for governance to issuers and crypto-asset service providers. In addition, it suggests equipping competent authorities with strong regulatory powers. It also mitigates legal risks by urging governments to modernize and clarify the application of financial law to make it conducive to these new financial assets.
It also provides recommendations for the regulation of Global Stablecoins, which are cryptocurrencies whose value is pegged to another currency. The policy suggests that GSCs should have appropriate recovery plans in place in the event of market instability. They should also be subject to robust redemption rights and stabilisation to maintain a stable value at all times and mitigate the risk of sudden drops in value.
Chaudhary took a positive view of the International Monetary Fund (IMF) and Financial Stability Board (FSB) position paper and said it was a “coordinated and comprehensive policy and regulatory framework” that took into account all risks, including those specific to emerging markets and developing economies (EMDEs).
Reddy also asked whether there was a multilateral consensus on regulation extending beyond the G20 to include other countries. Chaudhary responded that the roadmap adopted at the G20 encourages the IMF and the FSB to “strengthen institutional capacity beyond the G20 jurisdictions.” The roadmap calls on the IMF to leverage its network across continents and the FSB to leverage its Regional Consultative Groups (RCGs) in Asia, the Middle East and North Africa. For example, the IMF and the FSB have organized various workshops and seminars involving non-G20 countries.
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