Gandhinagar: India is expected to include three of its concerns in the Presidency note for a Synthesis Paper on crypto regulations. The paper will be taken up for discussion during G20 Leadership summit under India’s presidency to be held in Delhi.
Listing the three concerns, a senior Finance Ministry official said: “There is need to address macroeconomic and financial stability risks. Second issue is about investor protection and education. And third nothing should be done to stop technological innovation.” Now this will be included in the joint paper of IMF and FSB and circulated among the G20 members.
Meanwhile, the Outcome Document and Chair’s Summary, issued after third G20 Finance Minister and Central Bank Governor (FMCBG) meeting under India’s Presidency said: “We continue to closely monitor the risks of the fast-paced developments in the crypto-asset ecosystem. We endorse the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation, supervision and oversight of crypto-assets activities and markets and of global stablecoin arrangements. We ask the FSB and standard-setting bodies (SSBs) to promote the effective and timely implementation of these recommendations in a consistent manner globally to avoid regulatory arbitrage. We welcome the shared FSB and SSBs workplan for crypto assets.”
Addressing risks
The statement also mentioned that the group look forward to receiving the IMF-FSB Synthesis Paper, including a roadmap, before the Leaders’ Summit in September 2023, to support a coordinated and comprehensive policy and regulatory framework “taking into account the full range of risks, and risks specific to the emerging market and developing economies (EMDEs) and ongoing global implementation of FATF standards to address money laundering and terrorism financing risks.”
While the IMF submitted its paper in February, FSB gave its final recommendations on Monday. IMF’s paper sets forth a framework of nine elements that can help members develop a comprehensive, consistent, and coordinated policy response.
The nine element or policy actions include safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status. The other element prescribes guard against excessive capital flow volatility and maintain effectiveness of capital flow management measures. Another suggestion is to establish a joint monitoring framework across different domestic agencies and authorities besides establishing international collaborative arrangements to enhance supervision and enforcement of crypto asset regulations.
FSB framework is based on the principle of ‘same activity, same risk, same regulation’ and provides a strong basis for ensuring that crypto-asset activities and so-called stablecoins are subject to consistent and comprehensive regulation, commensurate to the risks they pose. There are two sets of recommendations – one for the regulation, supervision, and oversight of crypto-asset activities and markets and second for the regulation, supervision, and oversight of “global stablecoin” arrangements.
Prioritising needs
Earlier, addressing a press conference, Finance Minister Nirmala Sitharaman said the Indian Presidency has prioritised the need to consider macro financial implications of crypto assets along with financial stability concerns. The Presidency has also focused on bringing the specific concerns of the Global South onto the crypto assets’ agenda, she added.
Further, Reserve Bank of India Governor Shaktikanta Das said the early enthusiasm among countries about crypto and the belief that it’s a great innovation has gone. “It is completely muted and everybody realises that there are huge risks. So, there is a great amount of caution and concern around cryptocurrencies,” he said while referring to report Bank for International Settlements (BIS) which has given three options — prohibit, regulate or allow use without any restrictions.
