As India prepares to regulate crypto assets, International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva has said that banning private cryptocurrencies should be an option. Speaking at a G20 meeting in Bengaluru, Georgieva emphasized the need for strong crypto regulation and warned that failure to regulate could create financial stability risks. She also stressed the importance of differentiating between central bank digital currencies and stable coins, which are backed by the state, and privately issued crypto assets.
The IMF has proposed a nine-point action plan on how countries should treat crypto assets, recommending that countries not give any crypto asset a legal tender status. This comes as India’s federal economic affairs secretary Ajay Seth stated that G20 countries are working to reach a policy consensus on crypto assets to form better global regulation.
Private Crypto : India urge IMF to formulate globally coordinated approach to regulate crypto assets
Finance Minister Nirmala Sitharaman has also called on the IMF to formulate a globally coordinated approach to regulate crypto assets, reiterating the need for a global approach to crypto regulation multiple times. However, India’s Reserve Bank of India (RBI) remains a staunch opponent of private cryptocurrencies, with RBI governor Shaktikanta Das speaking in favour of crypto bans at different points in time. Das has also warned that the next financial crisis could be triggered by private crypto.
“We have to differentiate between central bank digital currencies that are backed by the state and stable coins, and crypto assets that are privately issued,” Kristalina Georgieva, IMF Managing Director.
“…if regulation fails, if you’re slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk,” Kristalina Georgieva, IMF Managing Director.
“Safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status,” IMF’s first recommendation.
“India is taking over as president of the G20 from December 1, 2022. It would be my intention that during the Indian presidency, we would be able to formulate a policy consensus on crypto assets, which will form the basis of a better global regulation,” Ajay Seth, India’s federal economic affairs secretary.
“The next financial crisis will be triggered by private crypto,” Shaktikanta Das, RBI governor.
As India holds the G20 Presidency until September 2023, the country aims to reach a consensus on crypto regulation during this time. With the IMF proposing a nine-point action plan and its Managing Director stating that banning private crypto should be an option, it remains to be seen how India will approach crypto regulation and whether a global consensus can be reached.