On Sunday, Union Finance Minister Nirmala Sitharaman stated that before India takes any action on regulating cryptocurrencies, there must be a global consensus for crypto regulation.
According to Sitharaman, to effectively regulate it, a global template may need to be developed, and everyone would need to collaborate on it, according to PTI.
Although “distributed ledger technology” has merit and promise, the Union Minister insisted that this does not mean that it should be controlled. I’m delighted the G20 has maintained it on its agenda for this year. The IMF has released a study on cryptocurrency and the way it might affect macroeconomic stability. The G20, of which India is presently the Presidency, accepted India’s proposal. According to Sitharaman, the Financial Stability Board (FSB), which the G20 established, has promised to provide a report that would also emphasize financial stability.
In the conversation with “Thinkers Forum, Karnataka,” Sitharaman was replying to a query on regulating the digital or cryptocurrency.
On February 24 and 25, Bengaluru hosted the first G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the Indian Presidency.
The underlying idea is that since digital currencies are entirely digital and technology-driven, they can only be used with all countries’ support because they rely on a distributed technology that can sometimes make establishing identity very difficult. However, this technology has potential, Sitharaman said.
“No one nation can successfully manage a technology-driven crypto asset on its own since technology knows no boundaries and may simply cross through. Therefore, all nations must be on board for it to be effective due to the very nature of it being technology-driven,” she added.
The Minister added, “All of us will have to work on it, otherwise regulating crypto may not be effective.” She went on to note that the G20, along with the OECD (Organisation for Economic Co-operation and Development) and other organizations like the IMF, World Bank, and so forth, share the opinion that a global template may need to be created.
One of them was the breakdown of FTX. High-profile cryptocurrency exchange FTX shut down in November after there were allegations of money being taken from customers. The central government’s Economic Survey paper for 2022–2023 said that the recent failure of the cryptocurrency exchange FTX and the accompanying sell-off in the crypto markets had highlighted the weaknesses in the crypto ecosystem.
Early in 2023, US regulators issued a warning that participants and banking institutions should be aware of the dangers connected with crypto-assets, including fraud and scams, legal ambiguities, erroneous or misleading statements and disclosures, and volatility. A crypto trading prohibition is not something that the RBI, the central bank of India, is very keen on.
Shaktikanta Das, governor of the RBI, has even stated that cryptocurrencies pose an obvious risk and that anything that generates value only from the speculative activity is merely disguised speculative activity. He described it as a danger to the macroeconomic and financial stability of the nation. Das contends that private cryptocurrencies would be the source of the “next financial crisis” if they are not “prohibited” and allowed to flourish. His main worries were its genesis, underlying value, and lack of transparency.