India, which currently chairs the G20, is pushing for a collective global effort to regulate the nascent digital asset industry and mitigate its potential risks.
During the latest G20 meeting, which ended on Saturday, the country’s finance minister held a workshop for member states to share their concerns about the risks of cryptocurrencies while discussing how to create a common framework.
Speaking to Reuters on the sidelines of the G20 meeting in Bengaluru, US Treasury Secretary Janet Yellen said it was “critical” to put in place a strong regulatory framework, but added that the United States had not proposed any outright bans.
“We did not propose a complete ban on cryptocurrency activities, but it is very important to introduce a strong regulatory framework. We work with other governments.”
However, the IMF was not so kind. The organization’s managing director, Kristalina Georgieva, told reporters after co-chairing a meeting with Indian Finance Minister Nirmala Sitharaman that banning the cryptocurrency should be one of the options.
The Reserve Bank of India (RBI) has long taken a hard line on digital assets, arguing that the nascent asset class has no underlying value. The central bank has consistently warned investors and the government against cryptocurrency, citing volatility as well as risks of fraud and scams.
Just earlier this year, India’s central bank governor Shaktikanta Das said that cryptocurrencies have no intrinsic value, and their perceived “value is nothing more than a fiction.” He said that cryptocurrencies are not worth even a tulip, referring to the famous Dutch outbreak of tulip mania at the beginning of the last century.
Despite calls from the central bank to ban cryptocurrencies, the Indian government has been discussing drafting a law to regulate cryptocurrencies. In July last year, the Indian government said that any effective regulation or ban on cryptocurrencies required global cooperation.
India’s crypto industry has been hit hard by tax laws
India’s controversial cryptocurrency taxation plans, which include a 30% tax on cryptocurrency income as well as a 1% tax deduction at source (TDS) at the time of payment of a crypto transfer, have negatively affected trading volumes on local cryptocurrency exchanges.
According to a study by the Esya Centre, a Delhi-based technology policy think tank, Indian crypto traders moved more than US$3.8 billion in trading volume from local exchanges to international crypto platforms after the country’s controversial tax policy took effect.
“Of these, a total of $3,055 million was moved offshore during the six months of the current financial year,” the report said, adding that “around 17 lakh users
