G20 Nations to Bring the First Global Crypto Regulations Ahead of Leaders’ Summit
India released the memo on August 1, over two weeks after more talks about its contents
During an ongoing roundtable session conducted during a G20 summit, top economic leaders pressed for stronger global coordination of crypto rules.
Kristalina Georgieva, Managing Director of the International Monetary Fund, rejected an absolute prohibition, comparing cryptocurrency to water: “You attempt to stop it from one side, it will discover some hole and come out.”
At the same conference, prominent US Treasury official Jay Shambaugh stated that establishing global crypto laws will not regulate the sector’s calamities, just as legislating seat belts did not normalize vehicle accidents.
The roundtable, sponsored by India as the present G20 president, followed Chatham House standards and was thus limited to the media.
An attendee at the session told a media that the metaphors used were public knowledge and that knowing about different points of view may aid a meaningful conversation regarding global crypto laws.
The statements fueled a feeling that stymied India’s intentions to present its presidential note on cryptocurrency.
According to two people familiar with the subject, the message was intended to outline a roadmap for crypto legislation and convey appreciation for India’s involvement in crafting it.
Local sources verified India’s intentions, while other G20 members resisted, requesting adjustments. They said that because India is now the G20 president, it represents the G20’s unity and that any statements it makes should be preceded by talks with members.
India released the memo on August 1, over two weeks after more talks about its contents. The memo is significant since it is an official document that expresses India’s views on worldwide coordination on cryptocurrency legislation.
Paper of Synthesis
India said in its presidential note that a planned “synthesis paper,” which will be issued jointly by the IMF and the Financial Stability Board (FSB), will be released by the end of August.
The report will concentrate on the global macro ramifications of cryptocurrency and is anticipated to contain suggestions from India’s presidential note as well as proposals from other standard-setting agencies.
Individuals familiar with the matter indicated that India’s drive for the inclusion of concerns about macro-financial implications and hazards peculiar to Emerging Markets and Developing Economies (EMDEs) is likely to be accepted and viewed as a success by local officials.
People acquainted with the subject told a media that India is looking to recognize its progress in pushing for a universally acceptable framework for crypto laws during the leaders’ conference in early September, and a prepared synthesis paper would represent that effort.
According to the same persons, who requested confidentiality because they were not allowed to talk on the topic, Indian Prime Minister Narendra Modi may laud the establishment of global crypto standards during India’s presidency during his presentation to the G20 leaders’ gathering.
The FSB Deadline
An FSB document advocating a framework for crypto assets established a de facto deadline for governments to follow its framework.
“By the end of 2025, the FSB will assess the status of the adoption of these two sets of suggestions (for crypto assets and stablecoins) at the jurisdictional level,” according to the report.
This essentially means that FSB member countries will have to create unique regulations or laws to fulfill the proposals by the end of 2025.
Potential Prohibitions
One of the big problems in India is whether accepting the FSB suggestions means that the country is justifying cryptocurrency and ruling out a ban.
Speaking at the G20 media briefing, Ajay Seth, a senior official from the Indian Finance Ministry, stated that the G20’s broad look doesn’t rule out any member country prohibiting crypto within its borders, saying “Any governing body that wishes to become powerful as a result of its situations ought to act so.”
At the same press conference, Reserve Bank of India Governor Shaktikanta Das stated that “the FSB report acknowledges that individual jurisdictions have the option to ban crypto if they so want.”
Closing Thoughts
Despite being the most influential in financial regulation, RBI is not the decision-maker on whether India would introduce crypto legislation.
Given Modi’s party’s overwhelming parliamentary majority, the choice would be made by his office and the Finance Ministry.
“India has the option to keep the current status order or introduce legislation; either way, we meet the FSB’s end-of-2020 deadline,” one of the persons said.
