Adjustments to Global Crypto Rules Come After G20 Meetings

Byline: Hannah Parker

In Bangalore on February 25, 2023, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) jointly created the new synthesis paper and announced that India would hold the G20 Presidency. Future international crypto regulations were established based on this statement.

Here’s what’s happening and how it will impact global crypto regulations.

Global Crypto Rules Based on Incoming FSB and IMF Synthesis Paper

The G20 summits have clarified that changes to international cryptocurrency regulations are required to address this quickly developing technology’s possible risks and advantages. While the potential advantages of cryptocurrencies, such as financial inclusion and innovation, are becoming more widely acknowledged, there are concerns about the potential risks, such as money laundering, fraud, and other illegal activities.

An international regulatory framework for cryptocurrencies was a top concern during the three days of G20 meetings held in India, among the 20 largest economies in the world.

The talks between the G20 Finance Ministers and Central Bank Governors were anticipated to outline the course for globally coordinated cryptocurrency regulations.

According to Indian Finance Minister Nirmala Sitharaman, the synthesis paper will be presented throughout India’s G20 Presidency, which ends in September when India welcomes G20 leaders worldwide.

When asked if the global crypto regulation consensus that India prioritised for its G20 presidency will be reached during India’s tenure, Sitharaman said, “first of all, we are going through the study process so that there can be informed discussions.”

Sitharaman alluded that “something should emerge” from the FSB’s anticipated paper in July 2023, resulting in the synthesis paper by September 2023.

The governor of Canada’s central bank warned other members not to give crypto assets the “regulatory stamp of approval” without a carefully considered strategy and a framework for execution, according to Sitharaman.

“The World Bank stated that views of all developing countries should also be included in any [crypto] policy framework,” Sitharaman added.

Shaktikanta Das, the governor of India’s central bank, claimed that the collapse of several big crypto companies, including FTX, and a worldwide pandemic, caused a marked change in perception regarding crypto assets among G20 countries. According to Das, the dangers associated with crypto assets are now widely accepted.

Web3 experts at Click here mentioned that the G20 had acknowledged the need for a coordinated, international strategy to regulate cryptocurrencies, emphasising mitigating these risks while encouraging innovation and expansion in the sector. The G20 summits have given decision-makers and regulators a crucial forum for talks and debates about the most effective ways to accomplish these objectives.

India’s Stance on Crypto

As of September 2021, cryptocurrency in India is only partially regulated and entirely accepted as a form of payment. The Reserve Bank of India (RBI) released a circular in April 2018 forbidding banks from offering services to people or companies engaged in cryptocurrency trading. The number of cryptocurrency exchanges functioning in India decreased due to the widespread disruption and uncertainty this created in the sector.

The RBI circular was overturned by the Supreme Court of India in March 2020, claiming that it was illegal and infringed upon the right to conduct any trade or business guaranteed by Article 19(1)(g) of the Indian Constitution. Since then, the Indian government has been trying to create a framework for cryptocurrency regulation, and several draught bills have been submitted to the Parliament.

In January 2021, the Senate received the Cryptocurrency and Regulation of Official Digital Currency Bill 2021. The measure provides a framework for developing an official digital currency issued by the RBI, which seeks to outlaw all private cryptocurrencies in India. There is still debate and conversation surrounding the bill’s provisions because it has yet to be passed.

India’s Prime Minister Narendra Modi has debated whether to draught a law to control or even outright outlaw cryptocurrencies for several years, but a conclusion has not been reached. The Reserve Bank of India claims that because cryptocurrencies are comparable to Ponzi schemes, in their view,, they should be banned.

On February 24, 2023, the IMF published a nine-point action plan for how countries should manage digital assets, with the first point recommending against making cryptocurrencies legal tender.

The fund asserted that after several cryptocurrency exchanges and assets collapsed in the last few years, such efforts have become a priority for officials and that delaying action is now “untenable.”

The question that now stands is when will India adopt crypto laws?

The ongoing discussion and debate among policymakers, regulators, and other variables make it difficult to predict when India will implement cryptocurrency laws.

Adopting a more progressive regulatory framework that fosters innovation and growth in the cryptocurrency industry has been called for, despite the Indian government’s concerns about the potential risks of cryptocurrencies, such as money laundering and fraud.

One of the many draught laws presented to the Indian Senate is the Cryptocurrency and Control of Official Digital Currency Bill, 2021. Private cryptocurrencies will be outlawed, and a structure for creating official digital money distributed by the Reserve Bank of India will be established.

The proposed bills have drawn criticism, with some stakeholders claiming they fail to consider the potential advantages of cryptocurrencies, including financial inclusion and access to new business opportunities.

Regulators and legislators must continue collaborating to create a regulatory framework that fosters innovation in the cryptocurrency industry while managing risk. The G20 is crucial to this process because it offers a global collaboration and cooperation platform that can help shape cryptocurrency legislation’s future. We can ensure that this exciting and innovative technology is utilised to its utmost potential while also defending the interests of all stakeholders by cooperating to address the potential risks and opportunities connected with cryptocurrencies.