India will engage in discussions with other countries before implementing regulations on crypto assets, according to a senior government official. While a blanket ban on such assets is unlikely, the release of a paper just ahead of the G20 meeting synthesising recommendations from the IMF and FSB has endorsed regulation instead. The paper acknowledges that widespread adoption of crypto assets could undermine monetary policy, fiscal risks, and global financial stability.
India will hold extensive deliberations with other countries before adopting any framework to regulate crypto assets, building on the momentum gained from its G20 presidency, a senior government official said on Sunday, indicating, however, that a blanket ban on such assets seems unlikely at this stage.
The release of a paper that synthesised separate recommendations by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to coordinate measures to stop crypto assets from undermining macroeconomic and financial stability was advanced by about a month so that G20 members could form their assessment on that before the Leadership Summit on September 9-10, he said. The paper, released on September 7, has endorsed regulation of crypto assets, instead of a blanket ban, saying the prohibition could be “costly and technically demanding to enforce”. It, however, acknowledged that widespread adoption of crypto assets “could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability”.
While the paper’s recommendations could serve as global baseline standards for crypto regulations, it has left the scope for countries to put in place additional restrictions based on their perception of risks.The Delhi G20 declaration lauded the synthesis paper, which included a road map for supporting a “coordinated and comprehensive policy and regulatory framework taking into account the full range of risks”.
“Our finance ministers and central bank governors will discuss taking forward the road map at their meeting in October 2023,” it added.
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View Details »The government official conceded that it would be difficult for one country to ban crypto assets and escape from its impact if others don’t follow such extreme measures. So, some global baseline standards should be put in place for countries to draw from, he added.