Crypto Regulations: The Road Yet To Be Travelled
The roadmap that the IMF and FSB have presented emphasises the growing significance of crypto assets in the global financial ecosystem.
The G20, representing the world's most influential economies, recently endorsed a set of recommendations concerning cryptoassets. These guidelines, primarily shaped by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), drafted at the request of the Indian G20 presidency, aim to chart a clear path for the policy and regulatory framework for these digital assets.
Among the clear directives discussed was the advice against the legalisation of any crypto asset, like Bitcoin, as legal tender. This move is aimed at protecting monetary sovereignty. At the same time, issuers of crypto assets are being urged to obtain licences and register, bolstering trust in this volatile marketplace. An important principle introduced is treating similar activities and risks equitably, ensuring fairness across the board. Amidst the cacophony of speculation regarding potential crypto bans, the synthesis paper provides a resounding clarification: no blanket ban on cryptoassets. Recognising the difficulties of implementing a blanket ban on such a common and popular item, considerations have shifted to effective regulation and security.
ALSO READ: Global Consensus Emerging On Clearer Crypto Policies, FM Sitharaman Says
The roadmap that the IMF and FSB have presented emphasises the growing significance of crypto assets in the global financial ecosystem. It meticulously outlines key actions and pinpoints the organisations that will be at the helm of their implementation. At the forefront is the implementation of policy frameworks. The FSB is taking the lead on policy work related to Decentralised Finance (DeFi) and multifunction crypto-asset intermediaries. Standard-setting bodies (SSBs) have been tasked with the responsibility of re-evaluating how their existing standards apply to crypto-assets and stablecoin arrangements. This is crucial in ensuring that the evolving nature of digital assets doesn't escape the regulatory net. The IMF, FSB, and SSBs will collaborate in monitoring the multifaceted risks associated with cryptoassets and stablecoin arrangements. This idea is to ensure a holistic approach, drawing from the expertise of each entity.
Expanding the scope beyond the G20, the roadmap emphasises outreach to other jurisdictions. This global perspective, championed by the IMF and FSB, recognises that the ripple effects of cryptoassets aren't confined to the G20 nations. With the IMF prepping for an extensive outreach via its regional centres, the dialogue around cryptoassets promises to be both inclusive and far-reaching. This global dialogue naturally segues into the necessity for robust global coordination, cooperation, and information sharing. With the FSB positioned as the linchpin for these activities, the roadmap envisions a cohesive regulatory approach, which is essential given the borderless nature of crypto transactions. A significant challenge, however, remains: addressing data gaps. With the IMF taking the lead, supported by a consortium of international organisations, the roadmap is poised to ensure that decision-makers are equipped with comprehensive data, facilitating informed policy-making.
India's tryst with cryptocurrency has been a roller-coaster ride. From thriving in a rapidly expanding crypto sector to grappling with challenges like exorbitant taxes, shadow bans on banks working with crypto companies, and crypto coming under the Prevention of Money Laundering Act (PMLA), the journey has been eventful. The Synthesis Paper's recommendations, coupled with statements from key Indian officials, suggest that India is moving towards a more balanced and pragmatic approach to crypto regulation.
The upcoming G20 Finance Ministers and Central Bank Governors meeting in Morocco in October 2023 will spell out timelines for implementation. After seeing many false dawns, the crypto industry has its fingers crossed that this time, they will see some regulation drafted.
(The author is the Vice President of crypto investment platform WazirX)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
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