While Indian regulators are focused on protecting retail investors, the broader payments ecosystem faces significant risks from digital currencies, according to the Reserve Bank of India.
The primary focus of the G20 TechSprint 2023 is foreign exchange liquidity, anti-money laundering (AML), and central bank digital currencies with cross-border functionalities.
Nirmala Sitharaman insists that regulating digital currencies and the technology where they are minted does not equate to controlling the sector but are efforts to ensure users' protection.
The Finance Minister stated that with a global outlook on digital currencies, bad actors could not profit from regulatory arbitrage and would provide a blueprint for policing the sector.
The "Macrofinancial Implications of Crypto Assets" report notes that digital currencies present myriad risks to the economies of G20 nations pertaining to both external and internal stability.
In line with India's pledge to develop a framework to regulate the digital asset industry, the FSB, IMF, and BIS will submit recommendations to G20, focusing on countering risks tied to the assets.
Industry experts believe that once India concludes its G20 presidency, there will be a global consensus on whether or not to view digital assets as securities or commodities.
India will lead the G20 for a year and other issues it will tackle include food security, climate financing, multilateral reforms, and disaster risk reduction.
The finance ministry and the Reserve Bank of India are reportedly in agreement that banning non-custodial digital asset wallets without international coordination will be an effort in futility.
Australian central bank governor Philip Lowe stated that the private sector has proven to be better than central banks at innovating and designing new features for digital assets.
The Financial Stability Board has stayed away from the industry but says the recent Terra debacle has made it rethink its stand as it called for strict oversight over Bitcoin.
China’s President Xi Jinping has called on G20 leaders to lay the groundwork for central bank digital currencies adoption by developing standards and principles.
