G20 nations are reportedly aligning with the views of the Indian central bank around risks associated with cryptocurrencies. Reports reveal that the nations are now considering institutionalizing an internationally-accepted regulatory framework for crypto-assets.
In April, Indian Finance Minister Nirmala Sitharaman proposed a common framework for G20 countries to regulate the sector. With India holding the G20 presidency, cryptocurrencies have been central to the ongoing discussions.
Crypto Framework Proposed to G20 Nations
The G20 Finance Ministers and Central Bank Governors (FMCBG) attended a meeting that highlighted the macroeconomic risks and challenges associated with cryptocurrencies, according to local media.
India’s Reserve Bank has already voiced worries in the past about the negative implications of cryptocurrencies on the larger ecosystem. According to sources who spoke to the media, jurisdictions would have the choice to adopt tighter regulations. This would be in addition to the established framework in light of these risks. This, in turn, can even result in a complete crypto ban.
Last month, the third Financial Action Task Force (FATF) Plenary also stressed the importance of collective action in combating illegal crypto-related activities. Meanwhile, two reports were presented in this July meeting as well.
It included reports by the Financial Stability Board(FSB) and the Bank for International Settlements (BIS).
The FSB studies provided recommendations, but the agency claimed it did not fully address all risk categories related to crypto-assets. Meanwhile, the BIS report pointed out inherent structural flaws in cryptocurrencies and their limited potential to benefit society.
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Indian Government Backs International Collaboration
A person with knowledge of the matter stated, “Now most of them concur with RBI’s [Reserve Bank of India] concerns related to financial and other risks associated with cryptos. The third G20 FMCBG meeting did discuss this matter in great detail,”
While opposing the idea of unilateral prohibitions, the Indian government is said to believe that international cooperation is required to prevent regulatory arbitrage. They also emphasized the global need for anti-money laundering and terrorist financing norms.
Officials expressed worries about the collapse of cryptocurrency exchanges and their potential for being used for illegal activities during the meeting. Meanwhile, the Financial Stability Board (FSB) and the International Monetary Fund (IMF) are apparently evaluating aspects of cryptocurrency regulation and financial stability. The pair intends to present a “synthesis paper” later this year.
The meeting occurred at a time when a recent report revealed that 53.2% of Indian cryptocurrency investors seek long-term returns. Meanwhile, the web3 market in India is expected to boost the country’s GDP by $5.1 billion by 2032. This is in light of the young Indian population’s strong interest in the web3 sector.
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