Crypto Regulation Requires International Understanding And Framework

SUMMARY

Speaking at Inc42’s Fintech Summit 2022, Kumar said that a single country cannot form laws for cryptocurrencies, and it needs international cooperation

Government coming out with taxation rules for cryptocurrencies addresses concerns on money laundering and terrorism financing perspective, he said

Kumar also expressed his skepticism around private currencies, but welcomed the central bank’s move to introduce the CBDC

When the year 2021 ended, many Web3 believers termed it as the ‘Year of Cryptocurrencies’. Globally, as well as in India, the crypto industry saw rapid growth in terms of investors and influx of venture capital funds. India also minted two crypto unicorns during the year. However, 2022 has turned out to be completely opposite to last year as regulatory ambiguity has raised concerns about the future of crypto in India. While governments across the world are discussing crypto regulations, there should be a universal approach to it, Rajnish Kumar, chairman of BharatPe board and former chairman of the State Bank of India (SBI), said.

Speaking at Inc42’s fintech summit, Kumar said that there is a huge debate around cryptocurrency and crypto-assets globally. However, the Indian government has at least released taxation rules for crypto income, along with tax deduction at source for crypto transactions. It partly addresses the concern about the chain of transactions from the perspective of anti-money laundering and anti-terrorism financing measures, he added.

“This (crypto regulation) is an area where no single country would be able to bring out the laws (alone). It requires international cooperation. For banking, we have the Bank For International Settlements. Similarly, for crypto, we need to have an international understanding and a framework has to be established,” Kumar said.

Kumar also said that the Reserve Bank Of India’s (RBI’s) views are well known and it is not ‘very comfortable’ with cryptos.

The central bank officials have repeatedly talked about the risks due to cryptocurrencies and said they may cause instability in the Indian economy.

In his foreword to the 25th issue of the Financial Stability Report (FSR), released on Thursday, RBI Governor Shaktikanta Das again termed cryptocurrencies a ‘clear danger’. “Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name,” Das said.

Kumar also expressed his skepticism around private currencies, saying he is not certain if private currencies can exist or should exist. However, he welcomed RBI’s vision on the central bank digital currency (CBDC).

In RBI’s recently launched ‘Payments Vision 2025’, the central bank said it is working towards the introduction of the CBDC in India.

Various experts also told Inc42 that the CBDC can ease the pain of cross-border payments, along with serving other purpose-driven use cases.