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India’s Digital Economy: Modi’s Call for Global Crypto Regulation and Ethical AI

India’s Digital Economy: Modi’s Call for Global Crypto Regulation and Ethical AI

When we contemplate the words “cryptocurrencies” and “artificial intelligence,” a myriad of thoughts and emotions may rush into our minds. These terms are emblematic of innovation and opportunity for some while evoking risk and uncertainty for others. They beckon visions of the future, where our lives are transformed by technology, but they also cast shadows of doubt and concern. These questions have gained renewed significance as Indian Prime Minister Narendra Modi, in his capacity as the G20 president, calls for a global framework to regulate these transformative technologies and ensure their responsible and beneficial utilization.

Cryptocurrencies and artificial intelligence (AI) are two of our era’s most disruptive forces. They possess the potential to revolutionize industries, introduce fresh opportunities, and address previously insurmountable challenges. However, they also bring significant risks and uncertainties, including price volatility, illicit activities, environmental concerns, ethical dilemmas, and societal implications. As such, we must establish a comprehensive global framework to oversee these technologies and steer them toward responsible and advantageous outcomes.

This article will examine the compelling arguments and initiatives of Indian Prime Minister Narendra Modi, who has championed the cause of global regulation for cryptocurrencies and ethical AI. His endeavors align with India’s own stance on cryptocurrency regulations, which saw the introduction of a 30% tax on crypto gains in 2022. Moreover, Modi’s vision reflects India’s burgeoning prominence in AI, where the nation ranks fourth globally in terms of AI talent.

Cryptocurrency Regulation: A Global Imperative

Prime Minister Modi made these pivotal declarations during the 2023 B20 Summit, underscoring the necessity of international rules for cryptocurrencies due to their far-reaching impact. He likened this call for regulation to the standardized controls in the aviation industry, a sector vital for global connectivity and safety. Emphasizing the importance of safeguarding the interests of all stakeholders, particularly those in developing and emerging economies, Modi underscored the need to harness the potential of these technologies judiciously.

India has been actively engaged in international discussions on cryptocurrency regulation, capitalizing on its role as the G20 presidency for 2023. The nation has released a presidency note, outlining its recommendations for a global framework for crypto assets, grounded in the guidelines issued by prominent bodies such as the Financial Stability Board (FSB), the Financial Action Task Force (FATF), and the International Monetary Fund (IMF). This note also highlights the imperative to address cryptocurrencies’ macroeconomic challenges, such as price volatility, involvement in illicit activities, and environmental ramifications.

India’s proactive stance on cryptocurrency regulation is commendable, underlining its astuteness in recognizing the opportunities and risks of these technologies. India is home to a burgeoning cryptocurrency market, boasting over 15 million users and facilitating transactions exceeding $6.6 billion in value. The nation also nurtures a vibrant and innovative cryptocurrency ecosystem, boasting over 300 startups and 10 unicorns. Nevertheless, India confronts intricate legal and regulatory issues concerning cryptocurrencies, including their legal status, tax treatment, know-your-customer (KYC) norms, consumer protection, and cybersecurity.

Hence, India faces the delicate task of balancing its domestic interests with its global obligations. The nation must craft a regulatory framework for cryptocurrencies that is lucid and coherent, one that propels innovation and economic growth while ensuring adherence and accountability. India also must collaborate harmoniously with other nations to establish a unified set of standards and rules for cryptocurrencies, fostering trust and stability while respecting the diversity and sovereignty of individual nations.

Ethical AI: Charting a Responsible Path

Prime Minister Modi also accentuated the significance of embracing swift technological advancements while preserving the interests of all stakeholders. India’s growing prominence in the AI domain, ranking fourth globally in AI talent, positions it as a pivotal participant in shaping worldwide discussions on ethical AI and emerging technologies. Modi asserted that AI possesses the potential to revolutionize various sectors, including agriculture, healthcare, education, and manufacturing. Concurrently, he called for meticulous attention to its ethical deployment, recognizing the ethical dimensions linked to human values, rights, and responsibilities.

India has undertaken various initiatives to foster responsible AI, such as the National Strategy for Artificial Intelligence and the Responsible AI for Social Empowerment Summit. The nation has also entered into collaborative ventures with other countries to advance AI research and innovation, exemplified by the Global Partnership on Artificial Intelligence (GPAI) and the Indo-French Centre for Applied Mathematics (IFCAM). India has further harnessed AI applications for social causes, including disaster management, wildlife conservation, and women’s empowerment.

India’s proactive stance on ethical AI is indeed admirable, serving as a testament to its commitment to contributing to the global dialogue on AI governance and ethics. India has immense potential to leverage AI for the greater good, thanks to its population of 1.3 billion people, many of whom grapple with enduring challenges such as poverty, illiteracy, malnutrition, and disease. The nation’s rich and diverse cultural tapestry equips it to offer invaluable insights and perspectives on AI ethics and values.
As a consequence, India is confronted with the arduous task of balancing its technological aspirations with its social responsibilities. India must construct a robust and inclusive AI ecosystem that nurtures innovation and excellence while ensuring equity and justice for all. Moreover, India must harmonize its efforts with other nations to formulate a universal framework for ethical AI, one that respects human dignity and rights, while advancing human development and well-being.

India’s Vision: Leadership in the Digital Economy

Prime Minister Modi’s call for global cryptocurrency regulation and ethical AI encapsulates India’s overarching vision of ascending to a leadership role in the digital economy and innovation sphere. His pronouncements underscore India’s willingness to collaborate with other nations to shape these nascent technologies’ destiny. India, given its unique circumstances, bears both an unparalleled opportunity and a profound responsibility to occupy a pivotal role in shaping the global governance and ethics surrounding cryptocurrencies and AI. India should seize this moment and fulfill its mandate, as this endeavor will not only redound to its benefit but will also be a boon to the entire world.

Ending Remarks

In a world perpetually navigating the crossroads of innovation and responsibility, the clarion call by Indian Prime Minister Modi for global cryptocurrency regulation and ethical AI resonates as a beacon of foresight and prudence. As we stand on the precipice of a digital revolution, with cryptocurrencies and AI as the vanguards of change, Modi’s vision compels us to ponder our collective destiny.

Cryptocurrencies, with their tantalizing promises of financial inclusion and empowerment, and AI, with its boundless potential to augment human capabilities, beckon us forward. Yet, they also beckon us to consider the road we choose to traverse. Will we embrace these technologies with reckless abandon, stumbling into the abyss of unchecked consequences? Or will we heed the wisdom of international cooperation, shared values, and ethical compasses that ensure our journey is one of progress, equity, and shared prosperity?

The answer lies not only with India but with all nations, stakeholders, and individuals. We are at a pivotal juncture, and the choices we make today will reverberate through generations. Modi’s call is a reminder that leadership in the digital economy entails not just innovation, but a profound commitment to the greater good. As we contemplate the future of cryptocurrencies and AI, let us not forget the fundamental question: What kind of world do we want to create?

 

Source: https://in.investing.com/analysis/indias-digital-economy-modis-call-for-global-crypto-regulation-and-ethical-ai-200599314

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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Silvergate Bank’s crisis: A wake-up call for risk management in crypto banking

Silvergate Bank’s crisis: A wake-up call for risk management in crypto banking

The cryptocurrency market has recently been shaken by a significant crisis at Silvergate Bank, a financial institution that specialises in digital assets. The effects of this crisis have been widespread and have caused a great deal of concern among investors. Shares of Silvergate Bank have experienced a sharp drop, hitting an all-time low of $4.86 on Friday, representing a decline of nearly 98% since the institution’s record high close in November 2021. As a result, the market capitalisation of Silvergate Bank has suffered a total loss of over $7 billion. The impact of this crisis has not been limited to Silvergate Bank alone. The wider crypto industry has also been affected, with major players such as Coinbase Global and Ebang International experiencing a noticeable drop of around 1% each. Additionally, even the popular cryptocurrencies Bitcoin and Ethereum have both taken a hit, experiencing a decline of roughly 4.8% over the past week.

The crisis at Silvergate Bank started when the bank delayed filing its annual report. The delay sparked a sell-off of Silvergate’s shares, triggering a domino effect across the crypto market. The situation worsened when Silvergate Bank announced that it had made a risk-based decision to discontinue the Silvergate Exchange Network, it’s crypto payments network. This caused Silvergate’s shares to tumble by nearly 50% on Thursday’s New York stock exchange. The fall in crypto stocks is a reminder that the crypto market is still highly volatile and susceptible to sudden shifts. The fact that one bank’s crisis can greatly impact the entire market is concerning. However, it is worth noting that this crisis does not necessarily indicate a fundamental flaw in the crypto market. Instead, it may be an indication that some players in the market, such as Silvergate Bank, were not adequately prepared for the risks associated with the market.

The Silvergate Bank incident highlighted some significant issues with the bank’s risk management and financial reporting approach. One of the key revelations from the crisis is that Silvergate’s bad debts were not its assets but its deposits. In simple terms, this means that Silvergate had been using its customers’ deposits to invest in risky assets rather than holding those deposits in more secure and stable investments. This is a major red flag for any bank, and it particularly concerns the context of a bank that focuses on digital assets and cryptocurrencies.

It has become evident that Silvergate, a financial institution dealing with digital assets, was not adequately prepared to handle the volatile market. As a result, their customers and investors have suffered significant losses. To avoid such situations, managing risk is critical to dealing with digital assets and cryptocurrencies. Banks must remain vigilant in identifying, assessing, and mitigating potential risks. There are several key areas that banks should consider in their risk management approach.

Firstly, banks should identify various risks of digital assets and cryptocurrencies, including market risks (such as price volatility), operational risks (such as security breaches), legal and regulatory risks (such as compliance with AML and KYC regulations), and reputational risks (such as negative publicity). Once risks have been identified, banks should assess the potential impact and likelihood of each risk. This approach will enable banks to prioritise risks and allocate resources accordingly. Banks should take steps to mitigate risks by implementing robust security measures, conducting due diligence on clients and counterparties, and diversifying their digital asset portfolios. Banks must monitor risks continually and adjust their risk management strategies accordingly. This may involve using risk metrics, conducting stress tests, and staying up-to-date on industry developments.

Alongside risk management, banks should also consider how to report their books when dealing with digital assets and cryptocurrencies. Banks need to accurately report their holdings and transactions in real time because the value of these assets can change rapidly. This may require specialised accounting software and the development of internal processes for tracking and reporting digital asset transactions. Moreover, banks may need to adapt their reporting practices to reflect the unique characteristics of digital assets and cryptocurrencies. For example, banks may need to report on the specific digital assets they hold and the particular risks associated with those assets. Banks may also need to provide more detailed disclosures about their digital asset holdings and transactions to ensure transparency with clients and regulators. Risk management and reporting practices are vital for banks that deal with digital assets and cryptocurrencies. Banks must proactively identify, assess, and mitigate risks while developing robust reporting practices that accurately reflect their digital asset holdings and transactions.

Ultimately, the Silvergate Bank crisis serves as a cautionary tale for banks and investors alike. It highlights the need for proper risk management, financial reporting, and diversification, particularly in the context of digital assets and cryptocurrencies. While the market for cryptocurrencies and digital assets remains volatile and unpredictable, those prepared to take the necessary precautions and invest wisely may still be able to succeed and grow in this exciting and rapidly-evolving industry.

In times of crisis, it is essential to remember the importance of diversification. Investors who have diversified their portfolios may be better able to weather the storm caused by the fall in crypto stocks. Emphasising this again, it is also worth noting that the fall of crypto stocks does not necessarily mean that cryptocurrencies themselves are inherently risky investments. While the crypto market can be volatile, it has also seen significant growth in recent years and is expected to continue expanding in the coming years. As such, investors interested in investing in the crypto market may want to consider doing so through a diversified portfolio that includes a range of different assets.

It is also important for investors to conduct thorough due diligence when selecting investments in the crypto market. This includes researching the background and track record of the companies and individuals behind the investments and analysing market trends and potential risks. By taking a careful and informed approach to investing in the crypto market, investors can better protect themselves from sudden market shifts and crises like the one experienced by Silvergate Bank and the broader crypto industry.

Source: https://www.benzinga.com/23/03/31239033/silvergate-banks-crisis-a-wake-up-call-for-risk-management-in-crypto-banking

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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China investors call it quits as Xi, ‘zero COVID’ sap confidence

China investors call it quits as Xi, ‘zero COVID’ sap confidence

Taipei, Taiwan – For months, Singaporean investor Anndy Lian has been selling off Chinese stocks to reduce his portfolio’s exposure to the world’s second-largest economy.

Once a regular investor in Chinese tech companies, Lian now views  China as an increasingly risky bet as the country’s autocratic turn under Xi Jinping and ongoing “zero COVID” lockdowns cast a cloud over the economy.

“I started gradually lowering my exposure since last year as that was when the downward trend became obvious, but I’ve increasingly sold off my holdings this year as things have gotten worse,” Lian told Al Jazeera,

“The instability is my biggest concern as an investor. The overall environment in China is uncertain right now, and it goes way beyond the financial sector.”

Lian is among a growing number of international investors who are pulling back from China after years of record inflows.

Overseas investors shed more than $150bn in China-based yuan-denominated assets in the first quarter of this year, the largest decline on record. Chinese bonds alone saw a $61bn sell-off between February and May. Roughly $300bn could exit the country this year, more than double last year’s outflow of $129bn, according to forecasts by the Washington-based Institute of International Finance.

Overseas investors shed more than $150bn in China-based yuan-denominated assets in the first quarter of this year, the largest decline on record [File: Qilai Shen/Bloomberg]

China’s economy barely avoided contraction in the second quarter, expanding just 0.4 percent, a dramatic decline from 4.8 percent growth during the first quarter.

Lian said the effects of last year’s crackdown on the tech sector, which decimated the stock prices of major players such as Alibaba, Tencent and Didi, are still being felt.

In one of the most prominent episodes of China’s “techlash”, ride-hailing app Didi lost 80 percent of its market cap – more than $60bn in value – within a year of going public after Chinese regulators accused the firm of violating data security rules. Facing mounting scrutiny at home, Didi delisted itself from the New York Stock Exchange last month.

“Chinese tech companies may be great performers, but they need to be in the best possible environment to achieve the best returns,” Lian said.

“If you look at the tech crackdown last year, and how the value of a whole company like Didi can be virtually wiped out, it makes you nervous.”

Ride-hailing app Didi lost 80 percent of its market cap after Chinese regulators accused the firm of violating data security rules

Other investors, though, see room to adapt to Beijing’s tightening grip on the economy.

“Investors understand what the goals of the tech crackdown were, taking aim at inequality and related social issues, so I think that makes the sector still very investible,” Ker Gibbs, former president of AmCham Shanghai and a veteran China investor, told Al Jazeera.

“There’s always policy risk in China, and regulation moves much faster than in the US. That is something people must be accustomed to.”

Nonetheless, Gibbs said the lingering uncertainty around the Chinese economy has been a significant concern.

“For me, it’s all about the uncertainty of the lockdowns and zero-COVID and not knowing when it will all end,” he said. “Investors just can’t see where it’s headed. People don’t know what environment they’re in now.”

Beijing has given mixed signals to investors about what to expect.

While Chinese officials have promised to tweak pandemic restrictions for the sake of the economy, Xi has repeatedly ruled out shifting from “zero COVID” to living with the virus.

China has opened up new offerings of asset classes to foreign investors but also stepped up supervision of institutional investors in the country.

This month, authorities announced the launch of Swap Connect, a mechanism to allow overseas investors to participate in mainland China’s financial derivatives market.

Meanwhile, more than 80 Shanghai- and Shenzen-listed exchange-traded funds will be made available to investors in Hong Kong. Beijing has also announced it will substantially raise its currency swap with the territory to new levels to provide extra liquidity for the offshore yuan.

“There is a dramatic opening of China’s securities, insurance broking, and wealth management markets going on,” Duncan Clark, founder of Beijing-based investment advisory firm BDA, told Al Jazeera.

“The transition isn’t going to be easy, though, from N-shares [shares of Chinese companies listed in New York] to onshore Chinese listings or even Hong Kong listings. Investor confidence is shaken and Chinese issuers can’t meet face to face,” Clark added.

Lian said Swap Connect is unlikely to turn the tide of investors exiting the Chinese market.

“On the one hand, it may help attract new investors to China, but I doubt it will do much to retain those who are already moving away, and that is a bigger issue,” he said.

“It will take time to turn the tide. There will probably be a two or three-year trial phase until they get the settings right. Another question investors will ask is ‘How do we exit?’ Can they be assured they can withdraw their stock when they wish? We will have to see what the final details are when it comes out.”

Even as Beijing courts more foreign investors, it is also seeking to monitor them more closely. Last month, the China Securities Regulatory Commission formally issued guidelines mandating the establishment of communist party cells within global hedge funds that operate in China.

“I think it will be problematic, but mostly because of the optics back at headquarters in the US,” Gibbs said, noting that many hedge fund managers specifically asked him about the measures at a recent conference he attended in San Francisco.

“Those of us who operate in China long term understand the role the party plays and the importance of aligning with their goals for society. Actually, the conversations they have with you are often about issues of social compliance, like labour standards or equality, which is not necessarily a bad thing,” Gibbs added, describing the scrutiny as comparable to “Chinese-style ESG [Environmental, social and governance]”.

“But in the US, we see the CCP [Chinese Communist Party] and think of the whole party apparatus, and so the idea of a party official in the boardroom sounds much scarier from an American perspective.”
China’s handling of the pandemic has widened the perception gap between the country and global markets, according to some observers [File: China Daily via Reuters]

Some observers say that the perception gap between China and global markets has only widened since the pandemic.

“Many in China don’t realise how dramatically perceptions have changed overseas about their country,” Clark said. “The wall of zero-COVID and the Great Firewall works both ways: they keep capital out and information skewed on both sides. China will have to hustle much more to raise funds going forward. The penny hasn’t dropped yet.”

Beijing may need to work harder at retaining local capital as well.

“We need to remember this is not just about foreign capital and foreigners leaving China. It impacts everyone,” Gibbs said. “Many Chinese investors are heading out, too, to places like Singapore.”

Lian said he has noticed an increasing number of Chinese tech entrepreneurs setting up in Singapore, especially those working on blockchain-based applications.

“It depends a lot on their business structure, but I believe those who can move will continue to do so,” he said.

“So you have these startups that were founded in China, the largest market of all, by Chinese entrepreneurs, and now they are here in Singapore, and now they are bringing their capital with them. To me, that says it all.”

 

 

Original Source: https://www.aljazeera.com/economy/2022/7/21/china-investors-call-it-quits-as-xi-zero-covid-rattle-markets

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j