New Delhi: The G20 countries are discussing whether crypto assets should be regulated and whether there could be a common ground on their regulation, Union finance minister Nirmala Sitharaman said on Saturday, ahead of the G20 Finance Ministers and Central Bank Governors’ (FMCBG) meeting to be held later this month in Bengaluru.
Stating that technology plays a major role in crypto assets, she said: “On that, we are talking to all countries, if it is to regulate, if to do so, then one isolated country alone can’t do anything. Therefore, we are talking to all; can we have some standard operating procedure and whether that could be effective.”
All these matters will be discussed at the G20 meeting, she told reporters after her customary post-budget address to the board of the Reserve Bank of India on Saturday in the capital.
Sitharaman on Thursday discussed various matters related to the FMCBG meeting with International Monetary Fund managing director Kristalina Georgieva, including the issue of crypto assets. “FM Smt. @nsitharaman discussed role of IMF and other relevant international organisations to develop a globally coordinated approach on the regulation of #CryptoAssets,” the finance ministry said in a tweet on February 9.
India took over the G20 presidency from Indonesia on December 1 for one year. The G20 is a forum of the world’s biggest economies. India has included Bangladesh, Egypt, Mauritius, the Netherlands, Nigeria, Oman, Singapore and the United Arab emirates as guest countries during its presidency.
Cryptocurrencies are risky as they are neither backed by national governments nor have any intrinsic value, a government official said. “Many members of G20 are apprehensive about allowing them as means of payment, but willing to consider using the technology behind them for other purposes,” he said, seeking anonymity.
Issues pertaining to cryptocurrencies and rules to regulate them will require several rounds of discussions and the matter is expected to come up at the first meeting of the FMCBG, which is to be held on February 24-25, another official said, declining to be named.
The Reserve Bank has already voiced its concerns over the adverse effect of cryptocurrencies on the Indian economy, the second official said. The government, however, thinks that any unilateral ban or regulation will be ineffective because of the borderless nature of cryptocurrencies, he said, adding that international collaboration is needed to prevent regulatory arbitrage.
“Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage,” junior finance minister Pankaj Chaudhary had told the Lok Sabha on Monday. “Therefore, any legislation for regulation or for banning can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”