India initiates global dialogue for cryptocurrency regulations

Posted: September 11, 2023

• India’s regulatory framework would be based on a consensus achieved through discussions at both the global and domestic levels.
• While G20 leaders have endorsed cryptocurrency regulations, discussions would continue at the ministerial and government levels.

India has announced its intention to develop cryptocurrency regulations through a consultative process involving both international and domestic stakeholders. Ajay Seth, the Economic Affairs Secretary, discussed the country’s approach to cryptocurrency regulation during an interview with CNBC-TV18.

Seth emphasized that India’s regulatory framework would be based on a consensus achieved through discussions at both the global and domestic levels. He added that these discussions would carefully consider recommendations, and they would determine appropriate policies and actions accordingly.

Regarding the Reserve Bank of India’s (RBI) proposed ban on cryptocurrencies, Seth emphasized that it should not be viewed as a binary decision. Instead, it is a framework for assessing risks associated with cryptocurrencies. He indicated that India would develop its stance in the coming months.

Extensive consultations with domestic and international stakeholders needed

Seth highlighted the significant progress made within the G20, particularly by organizations like the International Monetary Fund (IMF), Financial Stability Board (FSB), Financial Action Task Force (FATF), and the Bank for International Settlements (BIS). These organizations collectively established a comprehensive policy framework for assessing cryptocurrency-related risks.

He also noted the G20‘s endorsement of earlier work on regulations for stablecoins and unbacked crypto assets, which includes the formulation of high-level principles and regulations for this asset class.

Seth underscored the G20’s recognition of the elevated risks associated with cryptocurrencies, especially for emerging economies. Discussions within the G20 focused on the building blocks for effective regulations, identification of responsible entities, establishment of a tentative timeline, and specification of necessary regulatory components.

He stated that clear understandings were reached on these matters, and further work would be conducted by relevant agencies. Each country would decide its course of action based on these understandings.

Seth mentioned that inflation remained high in several economies, prompting central banks to consider tighter monetary policies. He further added that high inflation could impact economic growth.

Seth also discussed the impact of lower global trade on India, particularly in goods exports. However, he noted that Indian services exports had been performing well, potentially mitigating the impact of subdued global trade.

CNBCTV-18 also reported that while G20 leaders have endorsed cryptocurrency regulations, discussions would continue at the ministerial and government levels to determine how to implement these regulations effectively. The focus would be on implementing regulations swiftly and comprehensively.