The Financial Stability Board (FSB) high-level recommendations for the regulation of crypto-assets were endorsed by the G20 leaders in the Delhi Declaration, which also stated that they continue to closely monitor the risks associated with the rapidly changing crypto ecosystem. The Delhi Declaration document stated, “We request the FSB and SSBs to promote the effective and timely implementation of these recommendations in a consistent manner worldwide to avoid regulatory arbitrage.”
The IMF and the FSB released a paper on cryptocurrencies two days before the G20 Summit meeting in New Delhi, in which they stated that a comprehensive policy and regulatory response for crypto-assets is required to address the risks of crypto-assets to macroeconomic and financial stability. The Indian G20 Presidency requested that the paper be prepared. According to India’s position on cryptocurrencies, any legislation regulating or outright outlawing cryptocurrencies can only become effective after extensive international cooperation on the assessment of the advantages and disadvantages.
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.
The widespread use of crypto-assets could threaten global financial stability, undermine the efficacy of monetary policy, avoid capital flow control measures, exacerbate fiscal risks, and divert funds that could be used to finance the real economy. It warned that these risks could make maintaining price stability more challenging, result in unstable financial flows, and put a strain on fiscal resources.
