As cryptocurrencies gain popularity and acceptance as a viable alternative to conventional payment methods, governments and organisations worldwide struggle to determine how to better regulate these new assets.
The International Monetary Fund (IMF) is one of these organisations, which has shifted its focus to India and identified cryptocurrency regulation as a priority mid-term issue, according to Tobias Adrian, the Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department, as reported by The Economic Times on April 20.
Adrian said on the margins of the IMF’s annual spring conference that the IMF’s assessment of India was “quite optimistic” and explained:
“I believe there are several prospects for growth and development” (in India is coming back). There is hope for healing. There is a great deal of anticipation about fresh growth potential and new advancements.”
In terms of the fund’s goal for India, he highlighted that “controlling crypto is unquestionably high” when it comes to the country’s mid-term structural challenges.
According to Adrian, this is now being done on a worldwide scale and includes the following: “Within the financial stability board, we are attempting to develop worldwide norms for regulating crypto assets. That, I believe, is critical for India to accept as well. Of course, I am aware that India has altered its taxation of crypto assets, which is a positive development.”
India takes a closer look at CBDCs
Additionally, Adrian claimed that “India is experimenting with central bank digital currencies (CBDCs),” which “may be fairly significant for financial inclusion and growth.”
Finally, he claimed that resolving outstanding regulatory problems in the banking and non-bank sectors was critical for the country’s growth and economic development.
Meanwhile, India’s finance minister Nirmala Sitharaman has asked the government to reach a consensus on how to deal with cryptocurrencies, citing the risk of private digital currencies being used for money laundering and terrorist funding.
On April 19, she participated in a panel discussion in which she emphasised the need of regulation as the only way to address these issues, which, in her view, no nation can address alone.
As she put it: “The only way forward is via technology-based regulation. It will have to be so proficient that it is not just ahead of the curve, but also on top of it. And that is not conceivable if any one nation believes it is capable of handling it. It must be uniform.”
In response to her worries, IMF managing director Kristalina Georgieva said that the institution will extend its crypto work in the nation, with a particular emphasis on cyber security threats, private digital currency regulation, and CBDC interoperability.
Elsewhere, the IMF has expressed concern about cryptocurrencies, stating in one of its most recent studies that cryptocurrency adoption is greater in corrupt nations with stricter capital controls. Simultaneously, the group opposes any cryptocurrency prohibitions, instead advocating for more regulation.
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