New Delhi: India to Consult with Other Countries on Cryptocurrency Regulation
The Indian government is taking its time to decide on the future of cryptocurrency assets. A senior official stated on Sunday that India will engage in extensive consultations with other countries before making any decisions.
Joint Paper by IMF and Financial Stability Board
A joint paper prepared by the International Monetary Fund (IMF) and the Financial Stability Board suggested that a ban on cryptocurrencies won’t be effective. Instead, the paper proposed a detailed roadmap for regulating cryptocurrency.
Changes in Crypto Issuers and Exchanges
Regulation may require crypto issuers and exchanges to rework their current models. The official mentioned that a structure similar to stock markets may need to be adopted, which would involve splitting the activities of a crypto exchange and aligning them with the workings of a stock market. This would address the risks associated with the collapse of some crypto exchanges.
Minimum Regulation Standards
The joint paper outlines the minimum regulation standards that countries should adopt. It also suggests that emerging markets, which face greater risks, may need to go beyond the base level of regulation.
Market Movements and Monitoring
The official stated that a ban by one country would only result in the market moving elsewhere. Additionally, it would be difficult to monitor every device to enforce a ban. However, with the implementation of Know Your Customer (KYC) and other norms, concerns around anonymity can be addressed.
G20 Endorsement and Future Discussions
With the endorsement of the G20 leaders, ministers and governments will discuss the FSB recommendations and work towards implementing them faster and more comprehensively. The official stated that India has a good framework to decide its way forward and that the foundation is ready. The country will determine how much further it wants to go in the coming months.
India’s Push for Global Regulation
India has been advocating for global regulation on cryptocurrencies to combat tax evasion and the round tripping of funds. The Reserve Bank of India (RBI) has called for a complete ban on cryptocurrencies, comparing them to gambling. However, the official emphasized that if other countries do not ban cryptocurrencies, it would be extremely difficult for one country to do so. India aims to build a consensus on regulation and gradually develop its own system.