Sitharaman was part of a brainstorming session on “Macrofinancial Implications of Crypto Assets” with G20 finance ministers and central bank governors at the IMF’s headquarters here on Friday. India currently holds the rotating annual presidency of G20 countries.
In her remarks, Sitharaman said the G20 acknowledges the work of the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in bringing out key elements of policy and regulatory framework.
The minister noted that there was consensus among G20 members to have a globally coordinated policy response on crypto assets that takes into consideration the full range of risks, including those specific to emerging markets and developing economies.
The last year episode of FTX’s bankruptcy, and its spat with Binance triggered a huge sell-off in the market and reduced liquidity. This event made the world realise the vulnerability of this asset class as they do not have any underlying value.
According to the chair’s summary released at the end of the two-day meeting of the first Finance Ministers and Central Bank Governors (FMCBG) held in February, the grouping will be looking forward to the IMF-FSB Synthesis Paper on crypto assets.
Further, in July, the FSB’s paper on crypto assets regulation will be tabled so that it could be discussed at the next meeting of the finance ministers and central bank governors.
Despite the rapid evolution of the crypto universe, there is no comprehensive global policy framework for crypto assets. Given the concerns over greater interconnectedness between crypto assets and the traditional financial sector as well as the complexity and volatility around crypto assets, policymakers are calling for tighter regulation.
India hopes to broaden the G20 discussion on crypto assets beyond financial integrity concerns and capture the macroeconomic implications and widespread crypto adoption in the economy.
This will require a data-based and informed approach to the global challenges and opportunities of crypto assets, allowing G20 members to shape a coordinated and comprehensive policy response.