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India Proposes Recommendations for Global Crypto Rules During G20 Presidency

India, currently holding the G20 presidency, has expressed its support for the Financial Stability Board's (FSB) recommendations for a global crypto framework, published in July. The country emphasizes the importance of addressing the risks associated with digital assets, especially in developing economies.

On August 1, India released its presidency note proposing input for a roadmap on a global framework for cryptocurrencies. The note aligns with the guidelines set forth by the FSB, the Financial Action Task Force (FATF), and the International Monetary Fund (IMF).

However, India has also suggested some additions to the existing guidelines, particularly focusing on developing countries. While the IMF considers the specific requirements of developing economies in its potential crypto guidelines, India urges the FSB to implement similar considerations. Additionally, India calls for outreach efforts to all jurisdictions to raise awareness of the risks associated with cryptocurrencies. This outreach should start with countries that have higher adoption rates of digital assets. Furthermore, India proposes extending the regulatory approach to the digital economy beyond the scope of the G20.

The note mentions that the Synthesis Paper jointly developed by the IMF and FSB will be released at the end of August, providing a comprehensive roadmap to be considered by the G20.

In July, the FSB issued its own guidelines for cryptocurrencies and stablecoins. The guidelines mandate crypto platforms to segregate clients' digital assets from their own funds and ensure clear separation of functions to avoid conflicts of interest. Regulators will also enforce strict cross-border cooperation and oversight. Stablecoin issuers, on the other hand, must obtain a national license from a single jurisdiction before conducting operations.

India's presidency note on crypto holds significant importance, as it represents the country's official recommendations for the framing of global crypto rules. The note aims to influence the next iteration of the synthesis paper jointly produced by the IMF and FSB. The synthesis paper is expected to be presented just before the G20 Leaders' Summit.

The note includes action points such as promoting the effective implementation of the FSB's recommendations and all other standard-setting bodies. It also stresses the importance of considering macro-financial implications and risks specific to Emerging Markets and Developing Economies. Moreover, India calls for outreach efforts to create awareness of risks related to cryptocurrencies, starting with regions that have witnessed higher adoption rates. The involvement of non-G20 members is also encouraged, and the responsibility to coordinate the work around global crypto rules is suggested to be handed over to the IMF and FSB.

News of India's presidency note first surfaced before the Finance Ministers and Central Bank Governors (FMCBG) meeting in India the previous month. Ajay Seth, a senior official of the Indian Finance Ministry, hinted at the note's existence. The note, being a product of India as the current G20 president, reflects the collective considerations of G20 members, and it is subject to changes based on their input.


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