Global Consensus Needed For Effective Crypto Regulation: FM

Union Finance Minister Nirmala Sitharaman emphasized the importance of a global consensus for regulating cryptocurrency, stating that India should wait until a global template is established before taking any action.

The Minister highlighted that effective regulation of cryptocurrency can only be achieved through cooperation among all stakeholders. She clarified that regulating cryptocurrency does not imply controlling distributed ledger technology, which has its benefits and potential.

"The G20 of which the India is currently holding the Presidency, it was India's proposal and it has been taken on board, I'm glad that the G20 has kept it in its agenda for this year, the IMF has given a paper on crypto currency and the way it can affect the macroeconomic stability. The Financial Stability Board (FSB), which was set up by G20, has agreed to give a report that will also focus on financial stability," Sitharaman said.

"Their (FSB) report and IMF's report are going to be discussed in July when Finance Ministers and Central Bank Governors will meet under the G20, and post that in September there will be a summit of Prime Ministers and Presidents of G20 nations that will be held in India," she said.

During a discussion with the "Thinkers Forum, Karnataka," the Minister responded to a question about the regulation of digital assets or cryptocurrencies. On February 24-25, Bengaluru hosted the G20 Finance Ministers and Central Bank Governors' (FMCBG) first gathering, which was hosted by India.

"The underlying principle is, because the digital currencies are completely digitalised and technology-driven, the technology which is very distributed, and some times identity is very difficult to be established, but which has potential, it will therefore have to be acted upon only with all countries coming on board," Sitharaman said.

"No one country individually, in a matter of technology driven, a crypto asset, can effectively control it, because technology doesn't have any borders, it can just pass through. So the very character of it being technology driven requires all countries to be on board, or else it will not be effective," she said.

The Minister further noted that a global framework may need to be developed, noting that this is the consensus among the G20, the OECD, and other organisations like the IMF, World Bank, and so forth said, "all of us will have to work together on it, otherwise regulating crypto may not be effective."

"But that does not mean that we are controlling the technology of -distributed ledger technology-, it has its goodness, potential and own strengths. We keep that in mind," she added.'

Sitharaman noted that inflation in India now is mostly "imported" because to the price of gasoline and fertilisers, highlighting the fact that India is currently under observation by the international community for how it managed to navigate its own path through the epidemic, Russia-Ukraine war, and its spillovers.

"So you are bringing it all in, while your own cause for inflation may be supply side- that inflation in India we are aware of and every government fights it. But today the pressure on inflation in India are largely because of the imported hikes in prices," she said, adding that despite everything, Prime Minister Narendra Modi has made sure that Indians won't suffer.