Crypto problem requires immediate attention, says FM Sitharaman
Washington: Issues related to crypto-assets require immediate attention and the response of the G20 must ensure that they do not lose any potential benefits while protecting economies from harm, Union Finance Minister Nirmala Sitharaman has said.
Sitharaman was part of a brainstorming session on “Macro-Financial Implications of Crypto Assets” with G20 Finance Ministers and Central Bank Governors at the IMF headquarters here on Friday. India currently holds the rotating annual presidency of the G20 countries.
Issues related to crypto have emerged as an important point of discussion among the G20 countries, and there is unanimity among the member states that it is urgent to regulate this sector. The brainstorming session was attended by global experts on this issue.
In his remarks, Sitharaman said the G20 recognizes the work of the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in bringing forward key elements of policy and regulations.
She also said that a synthesis article, which would integrate macroeconomic and regulatory perspectives for cryptoassets, is needed.
The minister noted that there was consensus among G20 members to have a globally coordinated policy response to cryptoassets that takes into account the full range of risks, including those specific to emerging markets and developing economies.
Earlier this week, Sitharaman had said that India’s G20 presidency aims to develop a common framework for all countries to manage risks related to cryptocurrencies in the wake of the recent shocks in the crypto market.
The last year’s episode of FTX’s bankruptcy, and its spat with Binance, triggered a major sell-off in the market and reduced liquidity. This event made the world realize the vulnerability of this asset class as they have no underlying value.
“Cryptocurrencies are a very important part of the discussion during the #G20India presidency, given so many collapses and shocks in cryptocurrencies. We seek to develop a common framework for all countries to deal with this issue,” she said during a discussion at the Peterson Institute for International Economics here.
According to the chairman’s summary released at the end of the two-day meeting of the first finance ministers and central bank governors (FMCBG) held in February, the group will look forward to the IMF-FSB Synthesis Paper on cryptoassets.
“I am happy to say one thing: There is almost a clear understanding that everything outside the central bank is not a currency. And this is a position that India has taken for a very long time, and we are happy that such a position of India is now also being recognized by so many different members. People are realizing that the technology is very useful for fintech,” she said after the conclusion of the FMCBG.
Furthermore, in July, the FSB’s paper on the regulation of cryptoassets will be presented so that it can be discussed at the next meeting of the finance ministers and central bank governors.
The International Monetary Fund-Financial Stability Board (IMF-FSB) synthesis paper will be delivered in September, she added.
Despite the rapid development of the crypto universe, there is no comprehensive global policy framework for crypto assets. Given the concerns over greater interconnection between cryptoassets and the traditional financial sector as well as the complexity and volatility surrounding cryptoassets, policymakers are calling for stricter regulation.
The global standardization bodies, such as the Financial Action Task Force (FATF), the Financial Stability Board (FSB), the Committee on Payments and Market Infrastructures (CPMI), the International Organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS), have coordinated the regulatory agenda while working within their respective institutional mandates.
India hopes to expand the G20 discussion on cryptoassets beyond financial integrity concerns and capture the macroeconomic implications and widespread crypto adoption in the economy.
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This will require a data-driven and informed approach to the global challenges and opportunities of cryptoassets, so that G20 members can shape a coordinated and comprehensive policy response.
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