India’s Finance Minister, Nirmala Sitharaman, has stated that the Indian government is engaging in “detailed discussions” with other G20 members regarding the development of a standard operating procedure (SOP) for regulating cryptocurrencies. The current unregulated environment for cryptocurrencies in the country and across the globe, has prompted India to seek a collaborative effort, on the sideline of the G20 Summit, to develop a comprehensive framework. Sitharaman stressed the need for a globally coordinated approach to regulating cryptocurrencies during a recent meeting with the International Monetary Fund Managing Director Kristalina Georgieva.
The Group of Twenty (G20) comprises 19 countries and the European Union, representing around 85% of the global GDP, over 75% of the global trade, and about two-thirds of the world population. Sitharaman has affirmed that the government is working together with other G20 members to develop a “coherent, comprehensive approach” that will regulate cryptocurrency mining and transactions.
In India, the cryptocurrency trade currently attracts a 30% tax and a 1% tax deducted at source (TDS). While the country has still not prepared a regulatory framework for cryptocurrencies, the government introduced new crypto tax penalties, including jail time for nonpayment of crypto TDS. Meanwhile, India’s central bank, the Reserve Bank of India (RBI), has continued to recommend a complete ban on crypto assets, including bitcoin and ether. RBI Governor Shaktikanta Das has warned that cryptocurrencies pose a risk to the country’s financial system and will cause the next financial crisis if they are not banned. The government’s stance on cryptocurrencies has been challenged by the Indian crypto industry, which has been advocating for regulatory clarity and a favorable operating environment.
Sitharaman’s call for a coordinated approach to regulating cryptocurrencies is a significant development that highlights the need for international collaboration to develop comprehensive regulatory frameworks for digital assets. The outcome of the discussions within the G20 will be closely watched by industry stakeholders and governments around the world as they could provide a model for regulating cryptocurrencies in other countries.
Uniform Regulations For Cryptocurrencies May not Work
In my humble opinion, I do not have any objections in forming regulatory frameworks to protect users. The idea of having uniform regulations throughout G20 countries is the issue I have. There are several reasons why uniform regulations for cryptocurrencies may not work.
Firstly, the global cryptocurrency market is highly fragmented, with different countries and regions having different regulatory frameworks and approaches to cryptocurrencies. Therefore, imposing a uniform set of regulations across all these jurisdictions may not be practical or feasible.
Secondly, cryptocurrencies themselves are highly diverse and complex, with different types of cryptocurrencies serving different purposes and having different features. For example, some cryptocurrencies are designed to be used as a medium of exchange, while others are intended to be used as a store of value. Furthermore, cryptocurrencies can be structured in different ways, such as security tokens or utility tokens, and can be traded on different types of platforms. Therefore, any attempt to impose uniform regulations may not take into account the nuances and specificities of different types of cryptocurrencies.
Thirdly, there may be differences in the priorities and interests of different countries and regions when it comes to regulating cryptocurrencies. For example, some countries may prioritize consumer protection, while others may prioritize financial stability. Therefore, it may be difficult to reach a consensus on uniform regulations that satisfy the interests and concerns of all countries and regions.
Finally, even if uniform regulations are agreed upon, enforcing them may be a challenge. Cryptocurrencies are highly decentralized, and transactions can be carried out anonymously and without the involvement of traditional financial institutions. Therefore, enforcing regulations may require sophisticated technology and a high degree of international cooperation and coordination.
Regulated By A Patchwork of Different Regulations Across Different Countries
It’s true that traditional finance, or “tradfi,” has not achieved uniform regulation globally, and this may be an indication that achieving uniform regulations for the cryptocurrency industry may also be difficult.
“Traditional finance is regulated by a patchwork of different rules and regulations across different countries and regions, and achieving global harmonization has been a long-standing goal of regulators and industry participants. However, despite years of effort, there are still significant differences in the regulatory frameworks across jurisdictions, and achieving uniformity is a complex and ongoing process.
Given the challenges of achieving uniform regulation in traditional finance, it’s possible that the cryptocurrency industry may also face similar difficulties in achieving global harmonization. However, it’s important to note that the cryptocurrency industry is still in its early stages, and there is still a significant amount of uncertainty and ambiguity around the regulatory frameworks that will ultimately be put in place.
Ultimately, the goal of achieving uniform regulations in any industry is to promote transparency, consistency, and stability. While it may be difficult to achieve this goal, it is an important one to strive for, as it can help build trust and confidence in the industry, promote innovation, and protect consumers.”
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”.