Regulation
India to Follow G20 Policy for Cryptocurrency Regulation: MoS Finance
Union Minister of State for Finance Pankaj Chaudhary has said that India is assessing the country-specific characteristics and risks that arise with cryptocurrencies in line with the International Monetary Fund (IMF) and the Financial Stability Board (FSB) summary note which was accepted by G20 leaders during India’s G20 presidency in 2023. Chaudhary was responding to Lok Sabha MP YS Avinash Reddy request during the Parliament monsoon session. Reddy asked whether India is planning to hold broader discussions on cryptocurrency regulation.
Chaudhary said that India, along with all other jurisdictions, should work with the G20 and other standard-setting bodies on cryptocurrency regulation, noting that the synthesis note could be the main policy document framing cryptocurrency regulation in India.
Economic Affairs Secretary Ajay Seth said Money Control that India has planned to release a discussion paper on its cryptocurrency policy stance 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 be part of the discussion.
India proposed the document during his presidency of the G20, to “capture the macroeconomic implications and widespread adoption of cryptocurrencies in the economy.” The document concludes with a “G20 Cryptocurrency Roadmap” that provides interim recommendations and timelines for cryptocurrency regulations.
The executive summary notes calls to address macroeconomic and financial stability risks posed by cryptocurrency. Some of the key recommendations include not using cryptocurrencies as a jurisdiction’s primary currency and having a clear tax regime for cryptocurrency. It also calls for cross-border information sharing on tax compliance to ensure monetary stability.
The note also provides suggestions for maintaining the financial stability of a jurisdiction. It calls for assigning responsibilities to crypto-asset issuers and governance service providers. It also suggests providing competent authorities with strong regulatory powers. It also mitigates legal risks by urging governments to modernise and clarify the application of financial law to be friendly to these new financial assets.
It also provides recommendations for the regulation of Global Stablecoins, which are cryptocurrencies whose value is tied to another currency. The policy suggests that GSC must have appropriate recovery plans in the event of market instability. It must also be subject to robust redemption and stabilization rights to maintain a stable value at all times and to mitigate the risk of a sudden drop in value
Chaudhary welcomed the International Monetary Fund (IMF) and Financial Stability Board (FSB) position paper, saying it was a “coordinated and comprehensive regulatory and policy framework” that took into account the full range of risks, including those specific to emerging market and developing economies (EMDEs).
Reddy also asked whether there was a multilateral consensus on regulation that went beyond the G20 to include other countries. Chaudhary’s response said that the roadmap adopted at the G20 encourages the IMF and FSB to “build institutional capacity beyond G20 jurisdictions.” The roadmap calls for 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. Therefore, the IMF and FSB have held various workshops and seminars involving non-G20 countries.
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