SUMMARY
IMF’s thoughts align with India on the matter of regulating cryptos and there is a need for balancing the pros and cons of cryptocurrencies: MD
Regulations must be in place to take advantage of what crypto can deliver, and manage risks to cybersecurity: Kristalina Georgieva
FM Sitharaman, on September 8, met Georgieva and called for a ‘global coordinated and synchronised approach’ on crypto regulation
Backing India’s push for global regulation of cryptocurrencies, International Monetary Fund (IMF) MD Kristalina Georgieva on Friday (September 9) said that the IMF will dedicate a team to work on the matter.
“…the world is changing very rapidly, especially in the area of digital. It is as if it was put on steroids by the pandemic, and in the world of money, crypto and stablecoin have emerged very strong. However, they are not regulated. So, India is right to call on the IMF to make sure that cryptos are regulated,” IMF MD told CNBC-TV18 in an interview.
Georgieva said that the organisation’s thoughts are aligned with India on the matter of regulating cryptos and that there is a need for balancing the pros and cons of cryptocurrencies.
Expressing apprehensions about crypto space turning into ‘wild, wild west’, Georgieva said that India is right to call on the IMF to formulate regulations governing cryptocurrencies.
The IMF MD also told the news channel that there ought to be differentiation of cryptos across different asset classes, pointing specifically to the distinction between non-backed assets like Bitcoins and backed ones such as stablecoins.
Elaborating further, Georgieva also noted that the differentiation could also lead to a separate set of risks such as dollarisation of the economy if the US wants stablecoins to dominate.
The IMF MD also called for deploying regulations to leverage ‘fast and cheap’ payment modules of cryptocurrencies, all the while managing cybersecurity risks.
Georgieva is currently on a visit to the country and has met a host of dignitaries including President Droupadi Murmu, Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, among others, so far.
Georgieva’s statement comes barely a day after Sitharaman spoke with the IMF MD and called for a ‘global coordinated and synchronised approach’ on regulation for crypto assets.
This is not the first time that Sitharaman has sought a global coalition for regulation of digital currencies. In April, the finance minister called for a multi-nation and technology-focused approach to address the issues on the matter. She also expressed concerns over use of cryptocurrencies for money laundering and terror funding.
While the government has not made its stance clear on crypto regulations, the Reserve Bank of India (RBI) has been vociferous in its opposition to cryptos. In July, Sitharaman informed the Parliament that the central bank has recommended banning cryptocurrencies.
The government, on the other hand, has introduced a heavy taxation regime to dissuade users from investing in cryptocurrencies. This year, it imposed a 30% tax on income from crypto transactions and a 1% TDS on such transactions.
This also follows a major crackdown on crypto startups in the country. In the last few months, the Enforcement Directorate (ED) has raided and launched investigations into a slew of exchanges, including WazirX, Vauld and CoinSwitch Kuber, for allegedly flouting norms and laundering money.
