cryptocurrency: India asks IMF and FSB to prepare technical paper on crypto assets

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India, which currently holds the G20 Presidency, has tasked the International Monetary Fund and the Financial Stability Board (FSB) to jointly prepare a technical paper on crypto assets.

The document could be used to formulate a coordinated and comprehensive policy for the regulation of crypto assets.

The G20 will develop a universally acceptable international framework to regulate crypto assets and declared that only a central bank-backed monetary unit would be considered a currency.

To complement the ongoing dialogue on the need for a policy framework, the Indian presidency has proposed a joint International Monetary Fund (IMF) and FSB technical paper, which would synthesize the macroeconomic and regulatory outlook for crypto assets, according to an official statement. .

The joint document will be presented at the meeting of finance ministers and central bank governors in October 2023, he said.

The IMF working paper, policy seminar, and joint IMF-FSB paper are expected to integrate policy issues relating to the macro-financial and regulatory outlook for crypto assets and facilitate a global consensus on a well-coordinated and comprehensive policy approach to crypto assets. , according to the statement.

Discover the stories of your interestIt is almost clear that anything that is not backed by the central bank is not a currency, said India’s Finance Minister Nirmala Sitharaman. We are happy that India’s position is recognized by others, Sitharaman said.

India was the first major economy to raise the dangers posed by cryptocurrencies. The Reserve Bank of India (RBI) had warned banks not to engage in transactions involving crypto and warned that it could be used to fund terrorism and erode financial stability.

There is wide recognition and acceptance that cryptocurrency, or asset, or whatever you want to call it, poses a risk to financial stability, monetary systems and cybersecurity, the Governor of the RBI, Shaktikanta Das. There will be a summary document on this whole question of cryptography. This will form the basis for developing an international architecture.

Certainly, some of the technologies involved could be useful tools for developing the financial services industry, he said.

There is now broad acceptance of the risks involved, Das said. There was agreement that this issue should be addressed as part of the overall objective of maintaining financial stability.

Minister Sitharaman said Canada’s central bank governor said cryptos should not receive a regulatory stamp of approval.

There have been calls for a global policy framework for crypto assets with various jurisdictions following different approaches in its treatment.

We need to distinguish between central bank digital currencies that are backed by government and stablecoins, and crypto assets that are issued by the private sector, IMF Managing Director Kristalina Georgieva said. There must be a very strong pressure for regulation… if regulation fails, if you are slow to do it, then we should not raise the table by banning these assets, because they can create a risk for financial stability .

Global standards bodies such as Financial Action Task Force (FATF), FSB, Committee on Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO) and Basel Committee on Banking Supervision (BCBS) coordinate the regulatory agendas, while working within their respective institutional mandates, according to the official statement.

India hopes to expand the G20 discussion on crypto assets beyond financial integrity concerns and grasp the macroeconomic implications and widespread adoption of crypto in the economy, she said.

This, he added, will require a data-driven and informed approach to global crypto asset challenges and opportunities, allowing G20 members to shape a coordinated and comprehensive policy response.

To inform policymakers of the broader implications of crypto assets on macroeconomic and financial stability, the Indian Presidency has asked the IMF to prepare a working paper on the subject for the second meeting of G20 finance and central bank MPs. held in Bangalore on February 23.

During the said meeting, a seminar titled Policy Perspectives: Debating the Path to Policy Consensus on Crypto Assets was organized, as part of the Presidency’s efforts to broaden the dialogue around crypto assets, he said. declared.

IMF keynote speaker Tommaso Mancini-Griffoli presented the working paper at the event, outlining the consequences of crypto adoption on the internal and external stability of a country’s economy as well as the structure of its financial system.

He also pointed to global information gaps regarding the crypto asset universe and the need to better understand the linkages, opportunities and risks related to crypto assets under the G20 umbrella.

Discussions covered a wide range of topics, including the need for a common taxonomy and systematic classification of the crypto asset universe, the benefits and risks of crypto assets, macroeconomic policy issues that needed to be addressed. further assessed, financial stability issues and regulatory responses. .

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