G20 governments are reportedly working to develop a unified crypto-currency policy. If successful, this crypto policy should function as a framework for all member countries to follow in regulating digital assets.
Commenting on this development, India’s federal secretary for economic affairs, Ajay Seth, explained at a press conference on Wednesday:
“Regulation should flow from the policy vision that is adopted. In fact, one of the priorities that has been put on the table is to help countries build a consensus for a policy approach to crypto-assets.”
The economic leaders of these G20 countries believe that a policy consensus on crypto-assets would improve global regulation. To inform the agreement on cryptoasset regulation, Seth called for a study of a series of tax specifics. These include monetary policy, the banking sector and the economic implications of crypto.
The first meeting of G20 central bank deputies is taking place this week in Bengaluru, India, from December 13-15. The South Asian country took over the G20 presidency for a year in early December, succeeding Indonesia. In addition to deliberations on cryptocurrencies, the discussions in Bengaluru focused on a range of macroeconomic issues. These include climate action financing and the Sustainable Development Goals, global debt vulnerability, and strengthening multilateral development banks.
G20 forum on crypto-currency policy a necessity after FTX implosion
The discussions on crypto-currency consensus follow the sudden collapse of FTX, a once prominent stock market. The company filed for Chapter 11 bankruptcy protection in early November, sending shockwaves throughout the crypto space. In the wake of FTX’s implosion, several other crypto-focused companies have experienced insolvency crises of varying degrees. In addition, calls for more airtight regulation of digital assets are growing louder.
Bahamian authorities arrested former FTX CEO Sam Bankman-Fried on Monday at the behest of the U.S. government. The disgraced former CEO faces extradition to the United States to face several criminal charges. These include wire fraud and conspiracy, in addition to the misuse of customer funds.
Other intergovernmental organizations are also calling for better regulation of crypto-currencies
The G20 is one of many intergovernmental organizations stepping up their efforts to regulate crypto-currencies. The Organization for Economic Cooperation and Development recently released a report imploring urgent policy action. Like the G20, this global forum also called for international collaboration regarding crypto-currency policy. According to the Organization for Economic Cooperation and Development, a harmonized effort on crypto-currency oversight would avoid the potential for regulatory arbitrage and fragmentation of global policies.
Indian Finance Minister Nirmala Sitharaman fully supports global collaboration on future crypto-currency oversight. She expressed criticism of digital currencies in July and said the Reserve Bank of India (RBI) does not consider crypto to be a currency. According to Sitharaman, the reason for this is that any modern currency requires the backing of a central bank or government. She had stated at the time:
“Crypto-currencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any regulatory or prohibitive legislation can only be effective after meaningful international collaboration on risk-benefit assessment and the evolution of a common taxonomy and standards.”