India Reveals IMF Is Working With G-20 for Crypto Regulations

Ajay Seth, secretary, Department of Economic Affairs, said crypto assets are not illegal in the country.

AccessTimeIconFeb 3, 2023 at 7:50 a.m. UTC
Updated Feb 3, 2023 at 4:05 p.m. UTC

For the first time since taking over the G-20 presidency, India has officially revealed details of the ongoing work around how to regulate crypto.

IMF is working on a paper in consultation with India that will focus on "aspects of the monetary policy and the policy approach to crypto assets," said Ajay Seth, secretary, Department of Economic Affairs.

Seth also revealed the IMF had led a meeting with representatives of developing economies about the paper in January. The details confirmed CoinDesk's earlier reporting around the IMF's role in the G-20's crypto-related discussions.

"There's going to be a 135-minute seminar on crypto assets on the policy response (during a G-20 meeting later this month) and for that again the IMF is preparing the finalized paper that will form the base," he added.

India assumed the presidency of the Group of 20 – the intergovernmental forum of the world’s 20 largest economies including the European Union as a bloc – on Dec. 1, giving it the responsibility of shaping the group’s agenda. On the eve of taking over the presidency, India's Finance Minister Nirmala Sitharaman had said regulating crypto assets will be a priority.

Sitharaman reiterated this on Friday, saying, "We are also looking at a global SOP (Standard Operating Procedure) to be available to be agreed upon for regulating crypto assets" for the meeting later this month that will see G-20 Finance Ministers and Central Bank Governors come together.

"Whilst recognizing the central bank as the authority for issuing crypto currency, the rest of the assets which are being created outside which are using very useful financial technologies, even those will have to be discussed because regulation cannot be done by any one country singularly, it has to be a collective action because technology doesn’t group any borders," Sitharaman added.

India's position on whether crypto is legal or not has been completely clear since it imposed stiff taxes in 2022 but didn't declare crypto as being legal.

“I don’t wait till regulation comes into place for taxing people who are earning profits,” the Indian Finance Minister said when asked how a nation can tax something that it doesn’t acknowledge is legal.

"The question of legality will come only if something is declared illegal. Crypto assets are not illegal in this country," Seth explained, becoming the second official to give clarity on the matter.

India's draft bill for crypto regulation has been in cold storage because the government wanted global consensus first.

"We had prepared a bill (which) went through internal discussions. Thereafter there was a consensus that we have to deal with it at the global level," Seth said.

In terms of next steps for India in shaping global crypto policy, the plan is to take the progress of the IMF paper from consensus at the G-20 to the crypto assets working group of the Financial Stability Board and then "all countries put together" because crypto is an asset class that can be traded across the board and thus "it requires all countries" to accept the policy, Seth said.

UPDATE (Feb. 3, 14:07 UTC): Adds Finance Minister comment.

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Amitoj Singh

Amitoj Singh is a CoinDesk reporter.