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New currency, next steps
Context:
Recently, at G20 summit, leaders found ways for regulating crypto currencies across globe. Global collaboration and cooperation on regulation of crypto-assets is needed and is a step forward.
Cryptocurrency Regulation and Bans
- Varied Global Approaches: Around the world, countries are dealing with cryptocurrencies differently. Some have strict rules, while others have outright bans. In India, our approach has been mixed.
- Importance of Global Collaboration: Cryptocurrencies has no limited borders. This can increase the risk of financial wrongdoing.
- International Support: The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have highlighted the need for a comprehensive global response to tackle the risks of cryptocurrencies to financial stability
Challenges of Banning Cryptocurrencies
- Complex Decision-Making: Enforcing a ban on crypto can be difficult, and it might lead to crypto activities moving to other countries with more lenient rules. This can also make it harder to monitor these activities and ensure they follow legal standards.
- Increased Risks: Banning cryptocurrencies could result in these transactions happening outside of a country's view, raising concerns about financial integrity and security.
- Implementing Standards: The IMF-FSB paper stresses the need to implement international standards for anti-money laundering and counter-terrorist financing that apply to cryptocurrencies and their service providers.
Ask for Global Coordination
- Future Discussions: Finance ministers and central bank governors from G20 countries will meet in October to discuss the roadmap outlined in the IMF-FSB paper. This is a positive step, recognizing that cryptocurrencies are a global issue.
- Balancing Act: As we navigate the world of cryptocurrencies, we must find a balance between allowing innovation and ensuring financial stability and security.
- Way forward: Instead, working together on a global scale, implementing standards, and regulating the crypto industry may offer a more effective way to manage this evolving financial landscape.
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