India reveals IMF working with G-20 on crypto regulations

For the first time since assuming the G-20 presidency, India has officially revealed details of the ongoing work on how to regulate crypto.

The IMF is working on a paper in consultation with India that will focus on “aspects of monetary policy and the policy approach to crypto-assets,” said Ajay Seth, secretary, Department of Economic Affairs.

Seth also revealed that the IMF had chaired a meeting with representatives of developing economies about the paper in January. The details confirmed CoinDesk’s earlier reporting on the IMF’s role in the G-20’s crypto-related discussions.

“There is going to be a 135-minute seminar on crypto-assets on the policy response (during a G-20 meeting later this month) and for that again the IMF is preparing the finished paper that will form the basis,” he added.

India assumed the presidency of the Group of 20 — the intergovernmental forum of the world’s 20 largest economies including the European Union as a bloc — on December 1, giving it the responsibility of shaping the group’s agenda. On the eve of assuming the presidency, India’s Finance Minister Nirmala Sitharaman had said that regulation of crypto-assets will be a priority.

Sitharaman reiterated this on Friday, saying: “We are also looking at a global SOP (Standard Operating Procedure) to be available to agree on for the regulation of crypto-assets” for the meeting later this month that will see G-20 finance ministers and central bank governors come together.

“Even if one recognizes the central bank as the authority for issuing cryptocurrency, the rest of the assets that are created outside that use very useful financial technologies, even they would have to be discussed because regulation cannot be done by a single country individually, it has to be a collective action because technology does not groups some boundaries,” Sitharaman added.

India’s position on whether crypto is legal or not has been very clear since it imposed strict taxes in 2022 but did not declare crypto legal.

“I’m not waiting for regulation to come in to tax people who make money,” the Indian finance minister said when asked how a nation could tax something it doesn’t recognize as legal.

“The question of legality comes only if something is declared illegal. Crypto-assets are not illegal in this country,” Seth explained, becoming the second official to clarify the matter.

India’s draft crypto regulation bill has been in cold storage because the government wanted global consensus first.

“We had drafted a bill (which) went through internal discussions. Then it was agreed that we have to deal with it at the global level,” Seth said.

As for the next step for India in shaping global crypto policy, the plan is to take the momentum of the IMF document from the G-20 consensus to the Financial Stability Board crypto-assets working group and then “all countries put together” because crypto is an asset class that can be traded across the board and thus “requires all countries” to accept the policy, Seth said.

UPDATE (February 3, 14:07 UTC): Adds the Finance Minister’s comment.