Bangalore The International Monetary Fund (IMF) has flagged significant financial risks over allowing the use of cryptocurrencies, as India discusses a planned regulatory framework with multilateral agencies and domestic institutions, government officials said. Make aware.
India currently does not have a policy on digital assets including crypto currencies such as bitcoin and ethereum. The lack of policy allowing people to own and trade currencies and other digital assets has prompted the government to announce a 30% tax on digital. Trade.
The current round of talks is expected to lead to a consultation paper over the next six months that aims to help India come up with a legal framework to regulate digital assets.
Indian Finance Ministry officials are in talks with various stakeholders including IMF, World Bank, Reserve Bank of India and Securities and Exchange Board of India (SEBI). According to one of the Indian government officials cited above, the finance ministry has denied using cryptocurrencies as assets.
While the IMF did not comment on specific discussions with India, its head of mission for India Nada Chouri told Mint that crypto assets pose significant risks, including financial stability. “Cryptocurrency assets can also be misused for money laundering, terrorist financing and other illicit activities. Unless effective regulatory measures are implemented, the crypto-asset ecosystem will face serious consumer protection challenges such as fraud and cyberattacks. You may have to face it,” Choirie said.
He said that the IMF is also discussing this issue with other countries as effective policy requires multilateral understanding or cooperation.
The Finance Ministry’s consultation paper will cover how to deal with cryptocurrency, associated risks and its treatment as an asset class. This will form the basis of a policy to regulate it.
“We have prepared a consultation paper on cryptocurrency. Now, we have reached out to institutional stakeholders within and outside the country. We are taking and incorporating inputs from the IMF and the World Bank. We will base the consultation paper on that. Will update, and based on responses from RBI, SEBI, we will update it.” Clear – that (its) use case as currency is the weakest and there are many problems associated with it. As far as crypto assets are concerned, there are risks that assets come into the financial system and no country can control these. Risk in itself,” said the second officer.
Questions emailed to World Bank and Finance Ministry spokespersons on Monday remained unanswered as of press time.
New Delhi is also pushing for global cooperation or understanding on the treatment of cryptocurrencies at various forums, including the G20’s Financial Stability Board (FSB), as sanctions or regulation by a single country could prove ineffective given its digital nature. .
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