Under India’s presidency, The Group of Twenty (G20) unanimously adopted a regulatory roadmap for cryptocurrencies at a meeting in Marrakesh, Morocco, on October 13. The intergovernmental forum, comprising 19 sovereign countries, the European Union, and the African Union, accepted the proposals made in the joint report by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) in September. The report — IMF-FSB Synthesis Paper: Policies of Crypto-Assets – advocates for comprehensive regulations for the sector, arguing that banning cryptocurrencies will prove ineffective. It asks for cross-border cooperation and the sharing of information between regulators. Corporate governance and risk management standards must be defined and legislated for cryptocurrency firms. Regulators and government agencies need access to relevant data of cryptocurrency firms. All these recommendations need to be incorporated into the legislation by the member countries.
“We express our appreciation to the IMF and FSB for effectively putting together the IMF-FSB Synthesis Paper which the Leaders welcomed in the G20 New Delhi Declaration. We adopt the Roadmap proposed in the Synthesis Paper as a G20 Roadmap on Crypto Assets. This detailed and action-oriented Roadmap is essential to achieve our common goals of macro-economic and financial stability and to ensure effective, flexible, and coordinated implementation of the comprehensive policy framework for crypto assets,” the Fourth G20 Finance Ministers and Central Bank Governors Meeting, Marrakesh, Morocco, said in its communique.
India has been pushing for a global and unified approach to cryptocurrency regulations. What India meant was a global regime for cryptocurrencies — akin to the global Air Traffic Control cooperation or the Vienna Convention of Diplomatic Relations, 1961, that guides the rules for the global community of diplomats. The cryptocurrency regulations roadmap adopted by G20 is far from it. And what it is was never a matter of debate. It asks member countries to enact laws to guide the sector in their jurisdictions. As Parliaments are supposed to make new laws or bring amendments to existing ones whenever needed, India should have passed the legislation since it was first proposed for the Budget session in 2021.
“We call for swift and coordinated implementation of the G20 Roadmap, including implementation of policy frameworks; outreach beyond G20 jurisdictions; global coordination, cooperation and information sharing; and addressing data gaps,” a statement from the G20 meeting said.
The essential message from G20 embracing IMF-FSB-suggested crypto roadmap is that regulators and governments cannot simply wish cryptocurrencies away. They represent a technological advancement that can’t be reversed and put in cold storage. It’s like a genie in the bottle – once it’s out, it can’t be put back in it! Governments and regulators need to slug it out. They need to appreciate the novelties and power of this emerging technology. They need to accept and imbibe. They need to shed their dismissive approach.
Let’s take the example of one of the most valuable card brands – Ferrari. The company has announced that it will accept cryptocurrencies as a payment method for its luxury cars in the United States. It means people holding cryptocurrencies can buy Ferrari with these tokens, completely bypassing the use of fiat money – US Dollars or Euros. A Reuters report says the company intends to use cryptocurrencies as a payment method for buying its luxury vehicles in Europe. Ferrari’s decision is based on requests from the market and dealers.
“This will help us connect to people who are not necessarily our clients but might afford a Ferrari,” Reuters quoted the company’s chief marketing and commercial officer, Enrico Galliera. He stated that Ferrari’s order portfolio is booked until 2025, and the company is allowing cryptocurrency payments to attract new customers. In 2021, electric vehicle maker Tesla introduced Bitcoin payment for its cars. However, the company withdrew the initiative on concerns that Bitcoin’s proof-of-work transaction verification method is highly energy-intensive, a thought that goes against Tesla’s philosophy of making environmentally sustainable vehicles.
From dealers accepting cryptocurrencies to fintech companies adopting distributed ledger technology or blockchain technology to offer quick, efficient financial services to end users, crypto and blockchain are on the rise. Thinking that Central Bank Digital Coins (CBDC) are a good substitute for cryptocurrencies is a poor idea. For one, it negates the research and investments made to make this technology worth imitating. (IPA Service)