- The G20 under the leadership of India are mulling a global crypto regulatory framework.
- The framework will take into account input from the FSB and other core agencies.
G20 nations under the leadership of India, are considering introducing a global regulatory framework for cryptocurrencies. As such, India has released its proposal for the rule to have its suggestion included in the drafting of the global crypto rule. According to the presidency note, India opines that a more coordinated effort towards digital assets will be required to enforce international regulatory standards.
The G20 Presidency also believes that this same approach will be needed to minimise the risks associated with the nascent industry. Markedly, this note is assumed to be significant because it is the official document that holds India’s opinion on crypto before the next iteration of framing the global regulatory framework into a synthesis paper.
This synthesis paper is to be jointly published by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) before the end of this month. While the exact date for the publication of the paper is not yet certain, a previously published IMF blog post confirmed that the synthesis paper will be delivered at the upcoming G20 Leaders Summit sometime in September.
The FSB has always been keen on ensuring that crypto investors are protected against associated risks. Last year, the agency warned the public about the potential risks of crypto assets on global financial stability. In its report, FSB stated that crypto’s scale, structural weaknesses and rising inter-relatedness with the traditional financial system are risk catalysts. At the same time, the FSB highlighted that these risk factors have blossomed due to the absence of comprehensive regulation by the government.
In July, on its own, the FSB called for more robust and stricter rules for the crypto ecosystem and global stablecoin arrangements.
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As part of their collaboration, the G20 is interested in some of the recommendations postulated by FSB. The India G20 Presidency note has requested that the synthesis paper consists of action points promoting the effective implementation of the FSB’s recommendations as well as that of other standard-setting agencies.
IMF and FSB to Conduct Crypto Awareness Outreach
Another action point expected to be considered in the paper is the macro-financial implications and risks specific to Emerging Markets and Developing Economies.
Additionally, emphasis will be placed on conducting outreach to all jurisdictions to generate awareness and sensitize the public about crypto risks. This campaign will start with regions that have seen a higher adoption of crypto assets and would involve non-G20 members. The coordination of the work would be left to the IMF and FSB.
The existence of this note was first known ahead of the meeting between Finance Ministers and Central Bank Governors (FMCBG) which was held in India last month. Ajay Seth, a senior official of the Indian Finance Ministry made mention of the document without revealing details. However, G20 members sought changes to the note, given any document from India as the current president of the G20 should reflect the collective consideration of members.
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