G20 Set to Crystalize Global Crypto Rules as India Wraps Up Presidency

Leading economic officials pushed for greater global coordination of crypto regulations during a recent roundtable discussion held during a G20 meeting.

International Monetary Fund Managing Director Kristalina Georgieva opposed the idea of an outright ban, likening crypto to water: "You try to plug it from one side, it will find some hole and come out."

At the same meeting, key U.S. Treasury official Jay Shambaugh said drafting global crypto rules wouldn't normalize the sector's disasters, much like how mandating seat belts didn't normalize car crashes. The roundtable, which was hosted by India as the current G20 president, was conducted under Chatham House rules and thus closed to the media.

An individual present for the discussion shared details with CoinDesk, saying the metaphors shared were public knowledge and a robust discussion about global crypto rules could benefit from learning about these viewpoints.

Both Shambaugh’s and Georgieva’s office did not immediately respond to CoinDesk’s request for comment.

The comments contributed to a sentiment that stalled one part of India’s plans – putting forward its own presidency note on crypto.

The note was intended to reflect a roadmap for crypto regulations and show an appreciation of India’s role in shaping it, two people familiar with the matter told CoinDesk. Local reports confirmed India’s intent, but other G20 members pushed back, asking for changes. They said that given India is currently the G20 president, it represents the collective voice of the G20, and thus anything it puts out should be after consultations with members.

India published the note on August 1, almost two weeks after additional discussions around its contents. The note assumes significance as it's an official document that voices India's recommendations for global coordination around crypto regulation.

In its presidency note, India announced that an anticipated "synthesis paper," which will be jointly produced by the IMF and the Financial Stability Board (FSB), is expected by the end of August.

The paper will focus on the global macro implications for crypto, and is expected to include the recommendations from India's presidency note, as well as recommendations from other standard-setting bodies.

India’s push for an inclusion of concerns around macro-financial implications and risks specific to Emerging Markets and Developing Economies (EMDEs) is likely to be accommodated and is seen as an achievement by local officials, individuals familiar with it said.

India is hoping to celebrate its efforts in pushing for a globally acceptable framework for crypto rules during the leaders’ summit in early September, and a ready synthesis paper would exemplify that effort, the individuals familiar with the matter told CoinDesk.

It is even possible that Indian Prime Minister Narendra Modi will tout the creation of global crypto rules under India’s presidency during his address at the G20 leaders' summit, the same people said, seeking anonymity as they were not authorized to speak on the matter.

An FSB paper recommending a framework for crypto assets included a de-facto deadline to implement its framework for jurisdictions.

“The FSB will, by end-2025, conduct a review of the status of the implementation of these two sets of recommendations (for crypto assets and stablecoins) at the jurisdictional level,” the paper said.

Effectively, this means FSB member nations will have to bring in individual rules or legislation that implement the recommendations by end-2025.

Does this mean India will bring its first crypto bill by then? Not necessarily because India has taken steps to bring crypto under its overview and may deem that to be enough.

“India has already brought in anti-money laundering rules, a tax structure for crypto, and other plans to include Web3 are afoot in relevant ministries,” one of the people said.

One of the major questions in India is whether welcoming the FSB recommendations could mean it’s legitimizing crypto and thus ruling out a ban.

Ajay Seth, one of the senior officials from the Indian Finance Ministry speaking at the G20 media briefing, hinted that the broad approach of the G20 does not rule out any member country banning crypto within its own borders, saying “any jurisdiction which wants to be more stringent based on its own circumstances, should be doing so.”

At the same briefing, Reserve Bank of India Governor Shaktikanta Das said “the FSB report recognizes that individual jurisdictions have the choice to prohibit crypto if they so desire.”

The RBI is not the decision maker on whether India will bring crypto legislation, even if it’s perhaps the most important in framing financial legislation. Given Modi’s party has a comfortable majority in parliament, the decision would lie with his office and the Finance Ministry. “India could choose to maintain the status quo or bring legislation, either way we meet the FSB’s end-2025 deadline,” said one of the individuals.

“The Finance Ministry has not made its position public on whether it wants to ban crypto or not. But given its role in framing global crypto rules as G20 president, it’s unlikely it will choose the path of banning crypto, despite RBI’s strong desire for [a ban].”

During the G20 deliberations, one of RBI’s written requests from the FSB and the IMF was to include the word “ban” in forthcoming reports including the synthesis paper, one of the people said.

"RBI wanted the phrase ‘including ban’ to follow the word regulation but the standard setting authority said ‘regulation by definition includes a range of options, including banning so why put it in,’” one of the people said. “But there is no global acceptance for a ban. A ban has not been favored in any of the G20’s crypto roundtables or seminars. In fact, the overwhelming view nations noted is that a ban would be costly and ineffective.”

The RBI did not immediately respond to a CoinDesk request for comment.

Read More: Stablecoin Regulation Is a Sticking Point Between the G7 and G20