India’s G20 Presidency Leads Discussions on International Cryptocurrency Policy

Debate toward an international policy agreement

On the 25th, the Indian Ministry of Finance reported on a panel discussion on crypto-asset (virtual currency)-related policies held during the G20 finance ministers’ meeting.

India, the chair country, hosted this conference as a way to discuss the path to agreement on international cryptocurrency policy.

It presents issues to be considered and future policies regarding virtual currency.

G20 member countries, international organizations, experts and others participated in the seminar. Main topics covered were:

• Necessity of a common taxonomy for virtual currencies in each country
• Advantages and risks of virtual currency
• Macroeconomic Policy Issues That Need Consideration
• Financial Stability Issues and Regulatory Responses

First of all, Mr. Tommaso Grifoli of the International Monetary Fund (IMF) said that the benefits of virtual currencies include cheap and fast cross-border payments, integration of financial markets, and expansion of financial inclusion, but these have not yet been realized. He stresses that this has not been done.

Furthermore, the critical digital infrastructure for the ledger should be considered a public good, as security and efficiency issues cannot be guaranteed on private platforms. With the support of the G20, he called for a deeper global understanding of the opportunities and risks of cryptocurrencies and the interconnectedness within the cryptocurrency industry.

Cornell University economist Eswar Prasad and others discuss the current centralized nature of the supposedly decentralized field of cryptocurrencies.

Hyun Shin, Economic Advisor and Head of Research, Bank for International Settlements (BIS), discussed the costs and benefits that cryptocurrencies bring to the real economy and the need for clear regulatory boundaries for fintech innovation.

Other participants pointed out the lack of governance structures in the cryptocurrency sector and the need to consider non-cryptocurrency solutions to address existing challenges in global financial and payment systems.

Joint IMF and FSB report in late 2023

As a way forward, India proposed that the IMF and FSB (Financial Stability Board) prepare a joint report on the macroeconomic aspects and regulation of cryptocurrencies. This is expected to help develop a comprehensive policy approach to cryptocurrencies internationally.

The IMF and FSB will release the joint report at the fourth meeting of finance ministers in October. Seminars to be held on the sidelines of other G20 meetings under the Indian presidency will also supplement this content.

IMF regulatory policy

U.S. Treasury Secretary Janet Yellen said at the meeting that while the U.S. “is not proposing an outright ban on cryptocurrency activity, it is extremely important to have a strong regulatory framework.”

IMF Managing Director Kristalina Georgieva also told reporters that banning cryptocurrencies should be an option.

The IMF Executive Board today endorsed a policy proposal for cryptocurrencies created within the institution.

They have largely agreed on nine regulatory policies, the first of which states that cryptocurrencies will not have legal tender status.

The board said “a strict[cryptocurrency]ban is not the first option,” and agreed that targeted regulation could be applied depending on a country’s circumstances. However, there were also several board members who argued that an outright ban should not be ruled out. Director Georgieva is also believed to be one of them.

connection: IMF Executive Board Evaluates Effective Policy Elements for Cryptocurrencies

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