G20 to consider regulation of cryptoassets: Sitharaman
Finance Minister Nirmala Sitharaman said on Saturday that the issue of regulation of crypto assets will be taken up at G20 meetings as a collective view needs to be formed on the matter.
“Crypto is heavily tech-led and less human intervention. We are talking to all nations that if regulation has to be framed, one country cannot frame it alone. So we are talking to everyone to form a standard operating procedure (SOP) so that it is effectively.
“So all these are part of the discussion. The discussion process is going on in the G20,” Sitharaman told reporters, posting her address to the RBI board here.
Also read: Budget 2023 gives a virtual cold shoulder to cryptocurrencies
India has taken over the G20 presidency for 2023. The G20 is a premier forum for international economic cooperation that plays an important role in global economic governance.
Sitharaman had said on various occasions that India will push for collective efforts for global regulation of crypto-assets to check terror financing.
The minister outlined eight areas, including reforms in multilateral institutions and food and energy security, for discussion during the G20 presidency starting from December 1.
The recent collapse of the crypto exchange FTX and the subsequent sell-off in the crypto markets has put the spotlight on the vulnerabilities of the crypto ecosystem.
Crypto-assets are self-referential instruments and strictly speaking do not pass the test of being a financial asset because they have no inherent cash flows associated with them.
US regulators have disqualified Bitcoin, Ether and various other crypto assets as securities.
A rare joint statement by the US Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on January 3, 2023, highlighted their concerns about crypto-asset risks to the banking system, the recent Economic Survey had said.
The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments, and the global response to cryptographers is evolving, it had said.
Observing that cryptoassets are new forms of digital assets implemented using cryptographic techniques, the survey had said the market has been highly volatile, with the total valuation fluctuating from nearly $3 trillion in November 2021 to less than $1 trillion in January 2023.
The volatility of the crypto-asset ecosystem has brought to the fore their fragile support and governance issues, as well as the increasing complexity and non-transparency, it said.
With increasing risks to financial stability, the issue of crypto asset regulation has recently moved up the political agenda of many nations. International forums such as the OECD and the G20 are discussing a globally coordinated approach to the regulation of cryptoassets, it noted.
Oversight and regulation of cryptocurrencies has been difficult, and regulators around the world are finding it challenging to keep track of the new and emerging issues in the fast-moving unknown field, it said.
