Following extensive discussions with domestic stakeholders and global stakeholders, India will draft cryptocurrency regulations: By Ajay Seth

According to Economic Affairs Secretary Ajay Seth, the government will draft cryptocurrency rules after thorough consultations with local and international parties. Additionally, he said that in the next months, India’s stance will be resolved.

According to Ajay Seth, “We will carefully consider those recommendations, choose our own policies, and then take further action” based on the consensus that the group was able to reach or rather “build.”

He said, “You are asking a leading question…it is not to be viewed in that binary…about the RBI’s planned ban on cryptocurrencies.We will analyze our own situation in relation to what worldwide the leaders have decided that they would travel together by keeping in mind the framework that has been developed for evaluating risk and what will be solid policies. We will thus determine in the next months what should be our posture in light of them.

Additionally, he emphasized the significant advancements achieved by the G20 members, notably those made by the Financial Action Task Force (FATF), the Bank for International Settlements (BIS), the Financial Stability Board (FSB), and the International Monetary Fund (IMF). Together, these organizations have developed a thorough grasp of the policy framework for evaluating cryptocurrency risk.

Seth said that prior ministerial work on stablecoin and unbacked cryptocurrency asset legislation had been approved. High-level guidelines and rules have been developed for this asset class as part of its endorsement.

The Financial Stability Board (FSB) and the International Monetary Fund (IMF) had last week presented a strong argument for a concerted global policy response to deal with the dangers posed by cryptocurrencies and emphasized that there should not be any blanket bans. This was done in advance of the G20 leaders’ conference.

The IMF-FSB proposals included a “roadmap” and “bare minimum” guidelines for cryptocurrency legislation that each nation should have.

Meanwhile, a senior official was quoted by PTI as saying that any government may create a more stringent policy based on the danger it perceives from cryptocurrencies.

“Now that the FSB suggestions have received the support of the G20 leaders, ministers and states will debate and advance them. We anticipate there will be a lot of debate on how to execute it more quickly, thoroughly, and efficiently. We have a solid foundation to choose our own course of action. The foundation is prepared; however, how far we want to go after that will be decided in the next months before we make a decision, the source told PTI.

To combat tax fraud and money-routing, India has pushed for a worldwide ban on cryptocurrency. Cryptocurrencies like Bitcoin and Ether have been urged to be completely banned by India’s central bank RBI because they are similar to gambling, according to the request.

According to the source, it would be difficult for one nation to outlaw cryptocurrencies, and there has to be international agreement that all nations adhere to the “bare minimum” regulations described in the IMF-FSB document.

“Go ahead and outlaw cryptocurrencies if you want to. However, it will be very difficult for one country to outlaw it if the other nations do not. We must now take up this issue and attempt to reach an agreement on regulation. After that, we progressively choose our own system. The conversation will start right away in our system. It is a difficult task,” the source told PTI.

On October 9–15, 2023, in Marrakech, Morocco, the G20’s fourth gathering of finance ministers and governors of central banks will coincide with the World Bank and IMF’s annual meetings.

According to the official, there are hazards involved with cryptocurrencies since, unlike the stock market, the same group of organizations serve as depository and clearing systems.

“The goal of regulation is to ensure that risk is effectively handled. The official said that if all nations adopt the same policy, there won’t be arbitrage. “Any country that feels they have more risk can make their regulation more restrictive,” he said.

According to the IMF-FSB’s document, its proposed regulations would implement the maxim “same activity, same risk, same regulation,” create a minimal standard that jurisdictions should adhere to, and focus on a collection of problems that are prevalent in the majority of countries.

The nations will continue to carefully monitor the dangers of quick changes in the ecosystem for cryptoassets, according to the New Delhi statement released at the conclusion of the first day of the G20 leaders’ conference.

According to the statement, “We endorse the Financial Stability Board’s (FSB) high-level recommendations for the regulation, supervision, and oversight of cryptoassets activities and markets as well as of global stablecoin arrangements.”

The leaders urged prompt and uniform worldwide adoption of these proposals to prevent regulatory arbitrage.

The IMF-FSB Synthesis Paper, which includes a roadmap and will support a coordinated and thorough policy and regulatory framework taking into account the full range of risks and risks specific to emerging market and developing economies (EMDEs), as well as the ongoing global application of FATF standards to address money laundering and terrorism financing risks, was also welcomed by G20 leaders.

The statement said that at their meeting in October 2023, the central bank governors and our finance ministers will talk about moving ahead with the strategy.