Endorsing the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation of crypto-assets, the Delhi Declaration adopted by the G20 leaders asserted they continue to closely monitor the risks of the fast-paced developments in the crypto ecosystem.
“We ask the FSB and SSBs to promote the effective and timely implementation of these recommendations in a consistent manner globally to avoid regulatory arbitrage,” the Delhi Declaration document read.
Paper on crypto
Two days ahead of the G20 Summit meeting in New Delhi, the IMF and the FSB had come up with a paper on crypto, which stated a comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability.
The paper was prepared at the request of the Indian G20 Presidency.
Position of India
India’s position on crypto has been that any legislation for regulation for banning cryptocurrencies can be effective only after significant international collaboration on the evaluation of the risks and benefits.
Crypto assets are currently unregulated in India. The government does not register crypto exchanges and it maintains crypto assets, by definition, are borderless and require “international collaboration”.
Crypto assets have been in existence for more than a decade and have displayed significant volatility. Alongside their volatility, crypto-asset activities have also grown in complexity.
Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability, it had noted. Such risks could make maintaining price stability more difficult, cause destabilising financial flows, and strain fiscal resources, it cautioned.
Against that backdrop, the paper suggested for a comprehensive regulatory and supervisory oversight, which it said should be a baseline to address macroeconomic and financial stability risks. The emergence of clear risks necessitates appropriate policy responses, it added.
“We endorse the Financial Stability Board’s (FSB’s) high-level recommendations for the regulation, supervision and oversight of crypto-assets activities and markets and of global stablecoin arrangements,” the Delhi Declaration read noted.
“We ask the FSB and SSBs to promote the effective and timely implementation of these recommendations in a consistent manner globally to avoid regulatory arbitrage,” the declaration read.
It added, “Our Finance Ministers and Central Bank Governors will discuss taking forward the Roadmap at their meeting in October 2023.”
The biggest takeaway of the Delhi declaration was that all 83 paras of the declaration were passed unanimously with a 100 per cent consensus along with China and Russia in agreement. For the first time, the declaration, however, contained no footnote or chair’s summary.