As the G20 Summit draws near, India’s efforts to establish uniform standards for worldwide digital currency regulations have gained momentum, despite challenges.
Finance Minister Nirmala Sitharaman disclosed that negotiations are in an advanced stage for implementing standardized guidelines to govern digital assets across G20 nations.
Leaders of G20 nations are slated to convene in New Delhi for a two-day summit this month. The gathering will address various global issues, including the restructuring of international debt systems, food and energy security, and access to credit for developing nations.
However, India has dedicated substantial resources to create an international framework for regulating digital assets, with the nation leading the G20 since assuming its presidency in November 2022. Controlling digital assets has been a top priority for India’s G20 leadership.
Sitharaman stated, “India’s (G20) presidency has put on the table key issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets.”
India’s motivation stems from concerns about the potential spillover effects of a major industry collapse on the financial system and the cross-border nature of digital assets. Fearing the impact of digital currencies on local economies, India has rallied G20 nations to join its efforts through a series of conferences earlier in the year.
Finance ministers and central bank governors convened in Bengaluru to lay the groundwork for the proposed global regulatory framework for digital currencies. India’s plan also enlisted the support of international bodies such as the Financial Action Task Force (FATF), the International Monetary Fund (IMF), and the Bank for International Settlements (BIS).
Under India’s proposed international regulatory framework, digital currency service providers would need to obtain licenses across jurisdictions adhering to common standards. The rules aim to foster greater cooperation among nations to combat attempts to exploit regulatory loopholes.
“We are talking to all nations, that if it requires regulation, then one country alone cannot do anything,” Sitharaman explained. “We are talking with all nations, if we can establish some standard operating procedures that are followed by everyone to create a regulatory framework, and if it can be effective.”
Making Sacrifices for Global Objectives
It’s important to note that India lacks comprehensive local regulations for digital assets at present. Experts suggest that the government has put its efforts to establish domestic digital asset rules on hold in pursuit of its G20 ambitions.
Analysts believe that the central government is awaiting the outcome of its discussions with G20 nations to model local regulations after an international framework.
Currently, India imposes stringent tax measures on digital currency service providers and retail investors. Meanwhile, the Reserve Bank of India (RBI) continues to regard the asset class as a Ponzi scheme.
