India to Frame its Own Cryptocurrency Regulations: Economic Affairs Secretary

Introduction

India announced on Sunday that it will develop its own cryptocurrency regulations through extensive discussions at both the global level and with domestic stakeholders. Ajay Seth, economic affairs secretary, stated that the country will carefully consider recommendations and decide on its own policies.

RBI’s Proposed Ban on Cryptocurrency

Ajay Seth responded to questions about the Reserve Bank of India’s proposed ban on cryptocurrency by stating that it should not be seen as a binary issue. He mentioned that a framework for assessing the risk has been put together and India will analyze its own position based on global agreements.

G20’s Progress on Cryptocurrency Regulations

Seth highlighted the progress made within the G20 membership, particularly by organizations such as the International Monetary Fund (IMF), Financial Stability Board (FSB), Financial Action Task Force (FATF), and the Bank for International Settlements (BIS). These organizations have established a policy framework for assessing risk related to cryptocurrencies.

Endorsement of Regulations for Stablecoins and Unbacked Crypto Assets

Seth emphasized that there has been an endorsement of earlier work done by ministers regarding regulations for stablecoins and unbacked crypto assets. This includes the formulation of high-level principles and regulations for this asset class.

G20’s Recognition of Higher Risks Associated with Cryptocurrencies

Seth also mentioned that the G20 recognizes the higher risks associated with cryptocurrencies, particularly for emerging economies. Discussions within the G20 explored effective regulations, responsible entities, a tentative timeframe, and necessary regulatory components.

Global Growth and Inflation Concerns

Seth discussed the concerns of high inflation in several economies and the potential impact on economic growth. Central banks are considering tighter monetary policies and increased policy rates.

Impact of Lower Global Trade on India

Seth noted the impact of lower global trade on India, particularly in terms of goods exports. However, he highlighted that Indian services exports have been performing well, which could help mitigate the impact of subdued global trade.

Next Steps

Official sources stated that the G20 leaders have endorsed the regulations and now ministers and governments will discuss and implement them. India will decide its own way forward based on these discussions. It was also mentioned that banning cryptocurrency would be difficult if other countries do not ban it, and the focus should be on building a consensus on regulation.

Conclusion

India is set to develop its own cryptocurrency regulations through extensive discussions. The country will carefully consider recommendations and decide on its own policies based on global agreements. The G20 has made progress in establishing a policy framework for assessing risk related to cryptocurrencies, and India will decide its course of action based on these understandings.