Regulating crypto without global consensus will not be effective, says FM Sitharaman

No one country individually can effectively control a technology-driven crypto asset because technology doesn’t have any borders, it can just pass through, Union Finance Minister Nirmala Sitharaman

Published - April 23, 2023 02:34 pm IST - Bengaluru

File photo of Finance Minister Nirmala Sitharaman.

File photo of Finance Minister Nirmala Sitharaman. | Photo Credit: R.V. Moorthy

Underlining that global consensus is necessary for the regulation of crypto before India makes any move on it, Union Finance Minister Nirmala Sitharaman on April 23 said a global template may have to be created, and everyone will have to work together on it, otherwise regulating it will not be effective.

The Minister, however, said it does not mean controlling of 'distributed ledger technology', which has its goodness and potential.

"The G-20 of which India is currently holding the Presidency, it was India's proposal and it has been taken on board, I'm glad that the G-20 has kept it in its agenda for this year, the IMF has given a paper on cryptocurrency and the way it can affect the macroeconomic stability. The Financial Stability Board (FSB), which was set up by G-20, has agreed to give a report that will also focus on financial stability," Ms. Sitharaman said.

"Their (FSB) report and IMF's report are going to be discussed in July when Finance Ministers and Central Bank Governors will meet under the G-20, and post that in September there will be a summit of Prime Ministers and Presidents of G-20 nations that will be held in India," she said.

The Minister was responding to a question on regulating digital or cryptocurrency during the interaction with 'Thinkers Forum, Karnataka' here.

The First G-20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the G20 Indian Presidency was held during February 24-25 in Bengaluru.

"The underlying principle is because the digital currencies are completely digitalised and technology-driven, the technology, which is very distributed, and sometimes identity is very difficult to be established, but which has potential, it will therefore have to be acted upon only with all countries coming on board," Ms. Sitharaman said.

"No one country individually, in a matter of technology driven, a crypto asset, can effectively control it, because technology doesn't have any borders, it can just pass through. So the very character of it being technology driven requires all countries to be on board, or else it will not be effective," she said.

Further, noting that the understanding in the G-20, along with OECD (Organisation for Economic Co-operation and Development) and other organisations like IMF, World Bank and so on, is that a global template may have to be created, the Minister said, "all of us will have to work together on it, otherwise regulating crypto may not be effective."

"But that does not mean that we are controlling the technology of -distributed ledger technology-, it has its goodness, potential and own strengths. We keep that in mind," she added.'

Highlighting that India is today being observed by the global community for the way in which it steered its own way through the pandemic, Russia-Ukraine war and its spillovers, Ms. Sitharaman said inflation in India today is largely "imported" because of the price of fuel and fertilizers.

"So you are bringing it all in, while your own cause for inflation may be supply side- that inflation in India we are aware of and every government fights it. But today the pressure on inflation in India are largely because of the imported hikes in prices," she said, adding that amid all this Prime Minister Narendra Modi has ensured that people of India will not be put to suffering.

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