“Crypto is heavily tech led and less of human intervention. We are talking to all nations that if regulation has to be framed then one country cannot frame it alone. So we are speaking to all for forming a Standard Operating Procedure (SOP) so that it is effective.
“So all these are part of discussion. The process of discussion is on in G20,” Sitharaman told reporters post her address to the RBI board in New Delhi.
India has assumed the G20 presidency for 2023. The G20 is a premier forum for international economic cooperation that plays an important role in global economic governance.
Sitharaman at various occasions had said India will press for collective efforts for global regulation of crypto assets to check terror funding.
The minister outlined eight areas, including reforms in multilateral institutions and food and energy security, for discussion under its G20 presidency which has begun from December 1.
The recent collapse of crypto exchange FTX and the ensuing sell-off in crypto markets have placed a spotlight on the vulnerabilities in the crypto ecosystem.Crypto assets are self-referential instruments and do not strictly pass the test of being a financial asset because they have no intrinsic cash flows attached to them.
US regulators have disqualified Bitcoin, Ether and various other crypto assets as securities.
A rare joint statement by the US Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) on January 3, 2023, highlighted their concerns about crypto asset risks to the banking system, the recent Economic Survey had said.
The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments, and the global response to cryptos is evolving, it had said.
Observing that crypto assets are new forms of digital assets implemented using cryptographic techniques, the survey had said its market has been very volatile, with its total valuation swinging from almost USD 3 trillion in November 2021 to less than USD 1 trillion in January 2023.
The volatility of the crypto assets ecosystem has brought to the forefront their fragile backing and governance problems, as well as the increasing complexity and non-transparency, it had said.
With related financial stability risks rising, the issue of crypto asset regulation has recently moved up the policy agenda of many nations. International fora like OECD and G20 are discussing a globally coordinated approach to regulating crypto assets, it noted.
Monitoring and regulating crypto currencies have been tricky, and regulators across the globe find it challenging to keep track of the new and emerging issues in the fast-moving uncharted field, it said.