India Highlights Three Principles for a Global Framework on Crypto Assets

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India outlined three principles for a global framework on crypto assets in a document presented here to G20 finance ministers and central bank governors.

The Presidency contribution note underscores the need to address macroeconomic and financial stability risks, investor protection and education while reiterating that nothing should be done to stifle technological innovation. A government official said New Delhi has also highlighted the risks of money laundering and terrorist financing from these instruments due to their opacity.

We consider the note from the presidency an important contribution to the summary document. We also welcome the Bank for International Settlements report on the Crypto Ecosystem: Key Elements and Risks, said the President’s Summary and the outcome document released after the two-day meeting of Finance Ministers and Central Bank Governors of the G20. The International Monetary Fund (IMF) and the Financial Stability Board (FSB) will prepare a position paper on global crypto asset regulation for leaders at their meeting in September. They also endorsed the FSB’s high-level recommendations for the regulation, oversight, and oversight of crypto-asset activities and markets and global stablecoin agreements. The FSB on Monday unveiled final rules for crypto firms mandating the introduction of collateral to prevent losses such as stock market crashes. The recommendations, issued under the guidance of the G20, also revised its existing recommendations for stablecoins. RBI Governor Shaktikanta Das said the FSB report failed to address the crucial issue of financial stability.

RBI supported banning these assets given the risks they pose to overall macroeconomic stability. The inherent structural flaws in Cryptos make it unfit to play a constructive role in the monetary system, according to the BIS report. We call on the FSB and standard-setting bodies (SSB) to promote effective and expeditious implementation of these recommendations in a globally consistent manner to avoid regulatory arbitrage, the final document states.

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