GANDHINAGAR: As global agencies work out a framework on crypto assets, Indian authorities want three key issues addressed, including macroeconomic and financial stability, risks and investor protection and education, while ensuring that technological innovation is not impacted.
The comments by top officials came a day after the Financial Stability Board (FSB) released its recommendations, while noting that “some jurisdictions may also decide to take more restrictive regulatory measures”. After the meeting of G20 finance ministers and central bank governors, FM Nirmala Sitharaman told reporters that the IMF and FSB synthesis paper is expected in time for the leaders’ summit in Delhi in September.
Indian authorities are waiting for clarity on the global architecture before deciding on how they want to move forward on crypto assets. In the past, the RBI has called for a ban on the instrument, citing multiple risks, ranging from those to the currency and monetary policy to money laundering.
RBI governor Shaktikanta Das said that the FSB paper doesn’t go into the critical issue of financial sta-bility, while noting that some of the “enthusiasm” around crypto had become “muted” due to the collapse of some of the exchanges and loss to investors. “Everyone recognises the huge risk,” he said, adding that the Bank of international Settlements (BIS) too had taken note of the issue.
“Crypto has so far failed to harness innovation to thebenefit of society. Crypto remains largely self-referential and does not finance real economic activity. It suffers from inherent shortcomings related to stability and efficiency, as well as accountability and integrity. These structural flaws result from the underlying economics of incentives rather than technological limitations… crypto’s inherent structural flaws make it unsuitable to play a significant role in the monetary system,” BIS said in a recent report.
In the meantime, the Indian government will circulate a presidency note that will provide its stance on the issue. “We continue to closely monitor the risks of the fast-paced developments in the crypto-asset ecosystem,” chair’s summary released after the meeting said. It also sought a quick implementation of the “crypto assets reporting framework”.
