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Crypto legislation can only work with global collaboration

July 19, 2022

Crypto legislation can only work with global collaboration
The Reserve Bank of India has recommended a ban on cryptocurrencies citing ‘destabilising effects’ for the country’s monetary and fiscal health, but a law to regulate or ban cryptocurrencies can only be effective once there’s some form of international agreement in place, the Finance Minister said on Monday.

“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage,” Finance Minister Nirmala Sitharaman said in a written reply to a question from Lok Sabha MP Thol Thirumavalavan seeking information on the government’s plans to legislate restrictions on such instruments.

“Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” she added.

The Minister’s comments assume significance as they suggest a legislation for reining in the use of cryptocurrency, which had been included in Parliament’s list of business for two sessions last year, is off the table till a global compact of some form can be firmed up on their regulation.

Informing the Lok Sabha about the RBI’s concerns over the adverse effects cryptocurrencies could have for the economy, Ms. Sitharaman said: “RBI mentioned that cryptocurrencies are not a currency because every modern currency needs to be issued by the central bank or Government.

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