India supports international guidelines for crypto regulation but also suggests some additions

India, the current president of the G20, has published its input for a global framework for crypto regulation, supporting the recommendations of the Financial Stability Board (FSB) and other international bodies. The country also emphasizes the need to address the risks of crypto for developing economies and to extend the regulatory approach beyond the G20 scope.

India Supports FSB Guidelines for Crypto

On August 1, India's Presidency Note for input in a roadmap on a global framework for crypto was published on the page of G20, an intergovernmental forum of the 20 largest economies in the world. The document concurs with the guidelines written by the FSB, the Financial Action Task Force (FATF), and International Monetary Fund (IMF).

The FSB guidelines, published in July, provide a high-level framework for regulating stablecoins and other crypto assets based on existing standards and principles. The guidelines cover governance, risk management, disclosure, supervision, and cross-border cooperation.

The FATF guidelines, published in June, provide a common set of rules for combating money laundering and terrorist financing risks associated with crypto. The guidelines require countries to implement the "travel rule," which obliges crypto service providers to share customer information when transferring funds.

The IMF guidelines, expected to be published in August, will provide a synthesis paper that will offer a broad roadmap for crypto regulation, considering the views of various stakeholders and jurisdictions.

India Highlights Risks of Crypto for Developing Economies

While supporting the international guidelines for crypto, India also suggests some additions. Among them is an emphasis on developing countries, which may face greater challenges and vulnerabilities due to crypto.

The document states that developing economies may need more capacity and resources to implement effective regulation and supervision of crypto. They may also need more access to reliable data and information on crypto activities and risks. Moreover, they may be more exposed to illicit use of crypto, such as money laundering, tax evasion, and cybercrime.

Therefore, India urges the FSB to incorporate the specificities of developing economies in its guidelines and to provide technical assistance and capacity building to these countries. It also calls for outreach to all jurisdictions to "generate awareness of risks," starting from countries with higher crypto adoption.

India Proposes Extending Regulatory Approach Beyond G20 Scope

Another suggestion made by India is to extend the future regulatory approach to the digital economy beyond the G20 scope. The document notes that crypto is only one aspect of the broader digital transformation reshaping various sectors and industries.

The document states that the digital economy poses new challenges and opportunities for policymakers, regulators, and supervisors. It also requires greater coordination and cooperation among different authorities and stakeholders at the national and international levels.

Therefore, India proposes that the G20 should consider developing a comprehensive framework for the digital economy that covers issues such as data governance, digital taxation, digital identity, digital inclusion, and digital innovation.

In conclusion, India's Presidency Note reflects its active engagement and interest in shaping the global agenda on crypto regulation. The country has been exploring various aspects of crypto, such as its legal status, taxation implications, central bank digital currency (CBDC) potential, and innovation opportunities.

The country's input for the G20 crypto roadmap may also signal its willingness to adopt a balanced and pragmatic approach toward crypto regulation at the domestic level. However, it remains to be seen how India will reconcile its support for international guidelines with its legislative proposals that may ban or restrict crypto in the country.