India, currently presiding over the G20, is advocating for the creation of a global framework for cryptocurrencies with an emphasis on developing economies. The suggestions put forth by India hinge on the Financial Stability Board’s (FSB) recommendations for this global crypto framework, initially published in July.
In a note on the contribution by India to the roadmap for the global crypto framework, India aligns with guidelines penned by the FSB, the Financial Action Task Force (FATF) and International Monetary Fund (IMF). Interestingly, it also offers several additions mainly emphasizing the necessity of including developing countries.
On one hand, integrating developing economies in this collective effort seems worthwhile as these nations are increasingly adopting digital payment solutions and cryptocurrencies. From India’s perspective, such inclusion can generate the much-needed awareness of the risks involved in dealing with digital assets, which can be instrumental for these economies.
On the other hand, one might argue that this approach could stifle the organic growth and evolution of these economies. Regulatory frameworks can be a hurdle for many, posing challenges to innovation due to compliance costs and regulatory uncertainties. This approach might impose a limitation on the autonomy of these countries to manage their own digital economies.
The overall objective of the proposed additions by India seems to broaden the scope of the future regulatory approach. To extend this to the digital economy at large, beyond the G20, is a commendable approach that clearly pushes for a more concerted effort.
The FSB’s guideline also states a need for crypto platforms to segregate clients’ digital assets from their own funds, circumventing any potential conflict of interest. Clear regulations will be beneficial for users, as this distinction can safeguard their assets.
However, the necessity for stablecoin issuers to secure a license in any jurisdiction they wish to operate may cause further complications. This system may inadvertently exclude potential users in jurisdictions where the issuer has no license, blocking an entire class of users from adopting the technology.
In essence, the notion of India’s suggestions for a global crypto roadmap marks a significant move in the crypto landscape. It reveals the delicate balance between the need for framework and the potential to inhibit innovation. This move also demonstrates the growing urgency and recognition by world powers to address, engage, and incorporate the crypto realm into the global financial landscape. It’ll be intriguing to see how the crypto world embraces such regulation demands.
Source: Cointelegraph
