G20 finance chiefs meet: India’s bid to ban cryptocurrency stopped at consensus for regulation

India’s bid to come to a consensus within the Group of 20 (G20) nations to ban cryptocurrency hit a roadblock as the nations stopped short of going for an outright ban. They instead agreed to continue an international debate on cryptocurrency regulation, with the final outcome document citing a consideration towards “coordinated and comprehensive policy approach to crypto assets” from  “macroeconomic and regulatory perspectives, including the full range of risks posed by crypto assets.”

The growing uproar against cryptocurrency is significant following the collapse of cryptocurrency exchange FTX in November shook crypto assets such as bitcoin worldwide.

India’s finance minister Nirmala Sitharaman has been tough against cryptocurrencies in her last two annual budgets for the world’s fifth largest economy. The Prime Minister Narendra Modi-led administration has asserted its willingness to regulate the cryptocurrency sector. However, in 2020, India’s Supreme Court struck down the country’s central bank’s ban on providing services to cryptocurrency traders.

The Reserve Bank of India has expressed that virtual economic assets pose risk to the stability of the country’s overall financial system, a stance that has found support with some constituents of the G-20.

India’s finance minister Nirmala Sitharaman said on Saturday that Canada’s central bank governor “cautioned that crypto assets should not be given the regulatory seal of approval… without a well thought out approach and framework for implementation.”

Earlier, the French Minister of Economy and Finance Bruno Le Maire told reporters on Friday that “France has been advocating for a regulation of cryptocurrencies for many years, explaining that there is a need to protect consumers and to protect financial stability.”

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An Asia Nikkei report cited a central banking source as saying that India is trying to make use of the international debate to make a case for tougher cryptocurrency regulations at home.

The Reserve Bank of India governor Shaktikanta Das said at a news conference on Saturday that “there is now a wide recognition and acceptance of the fact that (crypto assets or products) involve several major risks to financial stability, to monetary systems, to cybersecurity issues … and they need to be looked at.”

“Going forward, the effort is to develop an international framework… to deal with this problem,” he said.

The United States has not “suggested outright banning of crypto activities, but it is critical to put in place a strong regulatory framework,” U.S. Treasury Secretary Yellen told Reuters on the sidelines of the G-20 meeting. “We are working with other governments.”

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