India Brings Crypto Concerns to the Forefront at G20

Governor of Reserve Bank of India (RBI) Shaktikanta Das (R) and India's Finance Minister Nirmala Sitharaman talks after a press conference at the end of the G20 Finance Ministers, Central Bank Governors (FMCBG) and Finance & Central Bank Deputies (FCBD) meetings, at the Mahatma Mandir in Gandhinagar on July 18, 2023. Image: Sam PANTHAKY / AFP

During the third G20 Finance Ministers and Central Bank Governors (FMCBG) meeting, India captured the spotlight by raising crucial crypto issues. The meeting, co-chaired by Union Finance Minister Nirmala Sitharaman and Reserve Bank of India (RBI) Governor Shaktikanta Das in Gandhinagar, Gujarat, witnessed India's active participation in advocating a global framework on crypto assets.

India's input paper presented to the G20 finance ministers and central bank governors emphasised three fundamental principles to address the challenges posed by cryptos. 

The first principle centred on mitigating macroeconomic and financial stability risks that may come out of the growing popularity of digital assets.

The second principle highlighted the significance of investor protection and education, recognising the need to safeguard investors from potential risks associated with crypto investments and provide them with essential information for making informed choices.

The third principle underscored India's commitment to preserving technological innovation while regulating cryptos effectively. Striking a balance between risk management and encouraging innovation became a critical focus for India's stance at the meeting.

India's input paper also highlighted the risks of money laundering and terrorist financing associated with cryptos. These concerns have prompted global financial communities to seek robust regulatory measures to address potential illicit activities.

Among the outcomes of the G20 meeting, member countries called for the swift implementation of the Crypto-Asset Reporting Framework (CARF), with a coordinated timeline for relevant jurisdictions to initiate exchanges by 2027. The CARF aims to enhance transparency and accountability in the crypto market, enabling better management of financial crimes and risks.

The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have been actively studying crypto assets' macro-financial implications. The ongoing IMF-FSB Synthesis Paper aims to develop a comprehensive policy and regulatory framework considering risks, especially those specific to emerging markets and developing economies (EMDEs).

In addition to the formal G20 FMCBG meeting, a Round Table discussion titled "Policy Dialogues on Crypto Assets" allowed for open and candid deliberations on key crypto-related questions.

India's active involvement in these discussions showcases its dedication to addressing the challenges posed by cryptos while fostering a conducive environment for technological innovation. The G20's consideration of India's input note indicates the growing global recognition of the need to strike a balance and effective approach to regulate cryptos.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash