Decrypt: As G20 chief, India can lead crypto talk

CHENNAI: On December 1, 2022, India took over the chairmanship of G20, an organisation that unites the 20 biggest global economies. The G20’s priorities have changed over the past two years as a result of the slow post-pandemic economic recovery and rising geopolitical tensions brought on by the Russia-Ukraine conflict. For India, the agenda will be dominated by issues like digital public infrastructure, sustainability and climate change, supply chain resilience, and reformed multilateralism.

As the globe enters the second decade of the twenty-first century, India can lead initiatives in important sectors thanks to its administration. Further, at a time while the world is debating whether stronger regulation of the industry is necessary, India, a nation that has occasionally pushed to outlaw and severely restrict cryptocurrency usage within its borders has the opportunity for setting the agenda to address this now with conviction.

PM Narendra Modi, is familiar with cryptocurrency. As a result of the technology, “decisions taken by one country are insufficient to handle the problems,” and he has already advocated for international cooperation to address issues brought on by cryptocurrencies.

Post the FX fiasco, setting up internationally coordinated crypto laws becomes a top priority that underscores a fresh need for stricter restrictions amid a new wave of crypto contagions. During its G-20 presidency, India is looking to the International Monetary Fund(IMF) to lead discussions on how to regulate crypto assets.

So far, The Financial Stability Board (FSB), the global financial watchdog that has been the de facto leader in formulating rules, may be losing influence due to a deliberate geopolitical shift in this direction. The FSB recently put up extensive international crypto guidelines. The group’s chair, who also issued a warning that cryptocurrency would soon endanger the stability of the world’s financial system, urged authorities to come to global standards for the industry.

The Finance Track and the Sherpa Track are separate parts of the G-20’s activities. All G-20 members’ finance ministers and central bank governors are included in the Finance Track. Nirmala Sitharaman, finance minister, and her team, will be in charge of setting the agenda now that the country is in the presidency. The other track, known as Sherpa, is for all topics outside the financial sector. The fiscal year 2023–2024 budget for India might introduce new crypto-related tax policies that may be in line with the G-20. However, this would necessitate a total rethink.

Sitharaman has the authority to enact regulations for cryptocurrencies if they are seen as assets in India, but if they are seen as currencies, the central bank of that country is in charge of doing so. The Reserve Bank of India has reiterated its position that India would be best served by outlawing the use of cryptocurrencies domestically. T Rabi Sankar, the RBI’s deputy governor, stated in June 2022 CBDCs might “destroy” any potential use cases for private cryptocurrencies.

The G20 presidency is a great opportunity to not only address the ambiguity in India’s cryptoverse, but also to position itself as a decisive initiator of addressing world issues that would have a legacy impact. It is upto India to grab this opportunity and showcase the leadership that will make the nation proud.