As India Wraps Up Its Presidency, the G20 Will Set Global Crypto Rules
World business leaders have been behind closed doors calling for global coordination of crypto regulation. They prefer this to nations trying to ban the industry.
The meeting took place under Chatham House Rules as India is ending its Presidency of the Group of Twenty Nations.
A recent roundtable at a G20 summit urged business leaders to push for greater global coordination of crypto regulations.
Kristalina Georgeeva, Executive Director of the International Monetary Fund, opposed an outright crypto ban. Comparing it to water, she said, “If you trap it on one side, it comes out.”
Jay Shambaugh, a senior US Treasury Department official, said that the drafting of global crypto regulations does not address the sector’s disasters would normalize in the same way that the requirement to wear seat belts would not normalize car accidents. The Round Table was held under Chatham House Rules and was therefore not open to the media. The host country was India as it is the current G20 President.
A person present at the discussion provided AskFX with details. They said that the metaphors are well known and a discussion of global crypto regulations might be useful by learning about these perspectives.
AskFX received no response from Georgieva or Shambaugh immediately after AskFX requested comment.
The comments added to sentiment that put the brakes on India’s plans to issue its own presidential statement on crypto.
Two people familiar with the matter said that the note is meant to be a roadmap for crypto regulations and show India’s contribution to shaping them. Local media confirmed India’s intent, but G20 members called for changes. India, as the current G20 President, represents the collective voice of the G20 and therefore anything published by India should be the result of consultations with members.
India released the note almost two weeks later, on August 1st. It is important because it is a document by India outlining its recommendations for global crypto regulation coordination.
India’s Presidency Note announced the publication of a “Synthesis Paper” by the IMF, the Financial Stability Board and the Financial Stability Board by the end of August.
The paper is expected to focus on the global macro impact of crypto and incorporate recommendations from India and other standard-setting organizations.
Local officials are likely to accommodate India’s request to include concerns about macrofinancial risks and implications specific to emerging and developing economies.
People familiar with the matter said that India hopes to celebrate its efforts at the leaders’ summit in early September by presenting a finished synthesis paper.
The same sources, who asked to remain anonymous because they were not authorized to speak on the topic, said it was possible for Indian Prime Minister Narendra Modi to tout the creation of global crypto rules during India’s G20 presidency.
An FSB paper recommending a framework for crypto assets included a deadline for jurisdictions to implement the framework.
The paper states that “by the end of 2025, the FSB will conduct a jurisdiction-level review of the status of implementation of these two recommendations (for stablecoins and cryptoassets).”
This means that FSB members until have to implement individual laws or rules by the end of 2025.
Does this mean that India will introduce its first crypto law by then? India may not present its first crypto law by then, as it has already taken steps to bring cryptocurrencies under its oversight.
One person said that India has already introduced anti-money laundering regulations as well as a tax structure for crypto. Further plans to integrate Web3 into the relevant ministries are also in the works.
In India, one of the main questions is whether accepting the FSB’s recommendations would legitimize crypto and therefore rule out a possible ban.
Ajay Seth from India’s Ministry of Finance pointed out at the G20 press conference that the G20’s comprehensive approach does not prevent member countries from banning cryptocurrencies within their own borders. He said: “Any jurisdiction that, based on its own circumstances, wishes to take stricter action should do so.”
Reserve Bank of India Governor Shaktikanta das said at the same press conference that “the FSB report recognizes the fact that individual jurisdictions can ban crypto if they wish.”
While it may play the most important role in setting financial legislation, the RBI does not make the final decision on whether India will adopt crypto laws. Modi’s party commands a large majority in parliament. Therefore, it falls to his office and the Treasury to make the final decision. One of the people said: “India can choose to keep the status quo and legislate. Either way, we will meet the FSB deadline by the end of 2025.”
The Treasury has not made its position on crypto bans public. Given her role as G20 President in defining global crypto rules, the RBI is unlikely to ban cryptocurrencies.
One person said that during the G20 talks, the RBI wrote to the FSB and IMF asking them to include the term “ban” in forthcoming reports, including the synthesis document.
One person said: “RBI wanted to add the phrase “including prohibition” after the word “regulation”, but the standard-setter said that “regulation is defined as a set of options, including a prohibition. So why lock them up?” “But there is no global acceptance for a ban. None of the G20 crypto roundtables and seminars endorsed a ban. The overwhelming opinion of nations is that a crypto ban would be expensive and ineffective.
