NEW DELHI: The government will take a calibrated approach on cryptocurrency and is not going to rush ahead despite the recommendations of a synthesis paper prepared by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) having been accepted by G20 finance ministers and central bank governors in Marrakech last week.
While the RBI had gone public with its concerns, the government is expected to task experts with assessing how recommendations on each of the parameters would impact India and also suggest ways to tackle them.
The synthesis paper, which was submitted ahead of the meeting of G20 leaders in Delhi last month, had identified at least nine risks, ranging from financial and macro stability to monetary policy and frauds and possible use by criminals (see graphic). It had called for licensing and regulation of crypto assets and recommended that countries should adopt the FATF (Financial Action Task Force) norms to check money laundering and terror funding.
Officials said that the government wants to move in a way that the risks are covered, and a foolproof regime is in place as rushing in could have serious implications for the economy. Based on the assessment by experts, or panels that may be constituted, the government will take the next set of measures and will consult regulators such as RBI and Sebi.
For instance, when it comes to trading on exchanges, the function of the custodian, depository and the exchange will have to be split, unlike in several jurisdictions where the exchange plays all the roles, creating risk of collapse. Besides, a political clearance will be required given that concerns over possible misuse have been flagged by PM Narendra Modi and home minister Amit Shah.
In Marrakech, RBI governor Shaktikanta Das had cautioned against rushing in. “The fundamental question is whether governments and central banks are comfortable with private currency because currency is a sovereign function. Their financial consequences, negative consequences for domestic and global monetary system and order, need to be understood… We need to understand all the risks before accepting them. We need to know how many sharks there are before entering the waters,” he had said.
Source: The Times of India