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crypto is not a currency, the G20 must regulate
Indian Finance Minister Nirmala Sitharaman has taken a tough stance on Bitcoin (BTC) and other digital assets, emphasizing that they cannot be considered as currencies.
Sitharaman says she expects the G20 – the intergovernmental forum made up of 19 sovereign countries, the European Union (EU) and the African Union (AU) – to develop a regulatory framework for cryptocurrencies .
Sitharaman also highlighted that crypto assets are primarily used for commercial, speculative and profit-making activities rather than functioning like traditional currencies issued by central banks.
Sitharaman further highlighted how cryptocurrency assets thrive through trading and speculation.
According to Sitharaman, the lack of regulatory measures has global implications due to the potential influence of cryptocurrencies on cross-border payments and illicit activities such as drug trafficking or terrorism.
Sitharaman was implied in G20 discussions to address the challenges presented by crypto assets, in favor of a unified global regulatory framework.
She stressed the importance of international collaboration to develop regulations which can effectively manage the risks associated with cryptocurrencies.
RBI Governor Warns of Crypto Risks
The Indian government is adopting blockchain technology but maintains reservations on cryptocurrencies due to their volatility and speculative nature.
In India, cryptocurrencies are not legal tender and there are currently no specific regulations governing them.
The recent introduction of the Cryptocurrency and Official Digital Currency Regulation Bill underlines the government’s call for global consensus on minimum cryptocurrency regulation, highlighting the need for international cooperation .
Additionally, the Reserve Bank of India (RBI) has adopted a cautious approach towards cryptocurrencies, emphasizing the importance of regulatory prudence to preserve financial stability.
In 2022, Governor Shaktikanta Das raised concerns about the lack of underlying value of cryptocurrencies and underlines the need to maintain financial stability amid the growing global popularity of cryptocurrencies.
The RBI’s prudent strategy aims to safeguard India’s financial sovereignty and mitigate potential disruptions to the banking system that could result from unregulated cryptocurrency activities.
By issuing warnings and promoting regulatory caution, the RBI aims to maintain resilience and security within the Indian financial ecosystem in response to the evolving digital asset environment.
Das further warned that the crypto “party” is not without risks. Despite this, the RBI remains vigilant against emerging risks and challenges, while remaining cautious. considering the possibility of introducing a central bank digital currency (CBDC).