 "Progressive and proactive: Crypto players all praise for IMF-FSB plan")
The Indian crypto industry has cheered the roadmap on crypto assets proposed in the International Monetary Fund (IMF) and Financial Stability Board (FSB) synthesis paper, adopted by G20 Finance Ministers and Central Bank Governors at Marrakech in Morocco.
Players believe that progressive regulations and a proactive approach to framing crypto-specific guidelines will act as a major fillip for the industry in the country.
Crypto firms based in India expect to see a crypto regulatory authority, empowered with regulatory capacities to apply regulation and exercise supervision, within the next 18 months.
“This ensures that the crypto asset ecosystem operates within a well-defined regulatory framework, promoting stability and investor protection. It could happen as early as next year immediately after the general elections. Now that we have the roadmap, the expectation is that it will be implemented in the next 18 months,” said Rajagopal Menon, vice-president at WazirX, a crypto exchange company.
Companies also expect clear consultation from the Centre with all industry stakeholders before the finalisation of policy guidelines.
“As a business, our only request is that government agencies and regulators must consult all stakeholders, including us, before finalising any rules and guidelines,” said Kiran Mysore Vivekananda, chief public policy officer at crypto exchange platform CoinDCX.
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This clarity for Indian crypto players is important due to the uncertainty they have seen in the recent past from the government, which impacted their user base. Issues such as taxation of assets, a bear market and regulatory uncertainties in the past have hit them hard. Many have in fact diversified and started other financial services on their platform. This also impacted their expansion plans with several of them laying off employees.
The IMF-FSB synthesis paper, published last month, outlines a policy framework implementation of crypto assets. This is in the backdrop of G20 discussions around a reporting framework for crypto assets
The IMF-FSB roadmap includes global coordination, cooperation, and information sharing on crypto assets. It also calls for implementation of the policy frameworks and development of a common framework to address data gaps.
As the roadmap on crypto assets gets implemented in the future, crypto companies operating in the country will need to invest in compliance measures to adhere to regulations. This includes investments in resources, technology, and personnel.
“Investments will include the cost of adapting business processes, hiring compliance personnel, and implementing software or systems for monitoring and reporting. This is going to put additional pressure on companies,” said Menon.
Moreover, the paper mentions that a growing presence of crypto assets used for payments poses challenges for data collection and analysis such as cross-border usage and currency substitution.
“As the data collection is synthesised, it will lead to lesser assumptions and a better policy framework. As far as currency substitution is concerned, the IMF-FSB paper mentions this risk in light of countries wherein the monetary policy institutions and the currency is weak. We do not believe that this would be the case in India,” Vivekananda added.
The road ahead
Crypto players expect implementation of the road map in the next 18 months
Companies will need to invest in compliance measures to adhere to regulations
Data collection necessary to understand the scale, scope, and risk profile of crypto activities
Data collection and analysis aims to monitor and mitigate crime that could be facilitated by cryptocurrencies