IMF Advises How Crypto Should Be Regulated Citing ‘Urgent Need for Cross-Border Collaboration’

IMF Advises How Crypto Should Be Regulated Citing 'Urgent Need for Cross-Border Collaboration'

The International Monetary Fund (IMF) has outlined some recommendations of how cryptocurrency should be regulated, noting that there is an urgent need for cross-border collaboration and cooperation on cryptocurrency regulation.

IMF Provides Recommendations on Crypto Regulation

The International Monetary Fund published a blog post on cryptocurrency regulation Thursday. The post titled “Global Crypto Regulation Should be Comprehensive, Consistent, and Coordinated” is authored by Tobias Adrian, Dong He, and Aditya Narain from the IMF’s Monetary and Capital Markets Department.

Noting that “Crypto assets and associated products and services have grown rapidly in recent years” and their “interlinkages with the regulated financial system are rising,” the authors acknowledged:

Crypto assets are potentially changing the international monetary and financial system in profound ways.

“Policymakers struggle to monitor risks from this evolving sector, in which many activities are unregulated,” they explained, adding: “In fact, we think these financial stability risks could soon become systemic in some countries.”

IMF Suggests How Crypto Should Be Regulated

The IMF post then discusses how cryptocurrency should be regulated. “The global regulatory framework should provide a level playing field along the activity and risk spectrum,” the authors asserted and proceeded to list three elements that should be included.

Firstly, crypto service providers — including those offering storage, transfer, settlement, and custody of reserves and assets — “should be licensed or authorized,” the authors wrote. “Licensing and authorization criteria should be clearly articulated, the responsible authorities clearly designated, and coordination mechanisms among them well defined.”

Secondly, “Requirements should be tailored to the main use cases of crypto assets and stablecoins,” they added, noting that regulators “need to coordinate to address the various risks arising from different and changing uses,” including central banks and securities watchdogs.

Lastly, the IMF post notes that “Authorities should provide clear requirements on regulated financial institutions concerning their exposure to and engagement with crypto.”

The authors further warned that “In emerging markets and developing economies, the advent of crypto can accelerate what we have called ‘cryptoization‘—when these assets replace domestic currency, and circumvent exchange restrictions and capital account management measures.” They concluded:

There is an urgent need for cross-border collaboration and cooperation to address the technological, legal, regulatory, and supervisory challenges.

What do you think about the IMF’s suggestion for crypto regulation? Let us know in the comments section below.

India to Impose Ban on Crypto Payments, Deadline for Declaring Crypto Assets, KYC Rules: Report

India to Impose Ban on Crypto Payments, Deadline for Declaring Crypto Assets, KYC Rules: Report

The Indian government has reportedly proposed banning the use of cryptocurrency for payments and setting a deadline for investors to declare their crypto holdings. Violators may be arrested without a warrant and held without bail. In addition, the crypto bill may call for a uniform know-your-customer (KYC) process for all crypto exchanges.

Proposed Rules in Indian Crypto Bill

As a cryptocurrency bill awaits to be taken up in parliament in India, several reports have emerged about what’s in the bill, which the government has not made public.

While crypto assets will reportedly be regulated, the Indian government is planning to ban the use of cryptocurrency for payments, Reuters reported Tuesday, citing an unnamed source and a summary of the bill it has seen.

The proposed legislation also states that the rules will be “cognizable.” Violators may be arrested without a warrant and held without bail, the news outlet detailed, quoting the summary of the bill:

The Indian government is planning a ‘general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing’ in digital currencies as a ‘medium of exchange, store of value and a unit of account.’

While cryptocurrency will not be legal tender in India, like it is in El Salvador, the proposed crypto legislation will give it legal status.

According to the source, self-custodial wallets will likely be banned. However, this may prove to be difficult as explained by the CEO of a major Indian cryptocurrency exchange. He recently described what he expects regarding self-custodial wallets and the new crypto legislation.

The Indian government is also planning to set a deadline to allow investors to declare their cryptocurrencies and comply with the new rules, Bloomberg reported Tuesday, citing people familiar with the matter.

Moreover, The Economic Times reported Wednesday that the proposed cryptocurrency legislation will require crypto exchanges to share their know-your-customer (KYC) data with regulators and government agencies, including the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the income tax department.

The crypto bill will also call for a uniform KYC process for all crypto exchanges, the news outlet added, noting that exchange platforms currently have their own procedures.

Regarding crypto taxation, the government is planning to add cryptocurrency to Section 26A of the Income Tax Act in the upcoming budget, the publication conveyed, noting that this will “necessitate taxpayers to reveal their cryptocurrency investments both in India and abroad.”

Last week, NDTV reported that it has seen the government’s cabinet note which names SEBI as the regulator overseeing crypto activities in the country. In addition, Indian Finance Minister Nirmala Sitharaman confirmed last week that the crypto bill has been reworked from its original version which seeks to ban all cryptocurrencies, including bitcoin and ether. She also answered several parliamentary questions regarding the proposed cryptocurrency regulation.

What do you think about the crypto regulation India has reportedly proposed? Let us know in the comments section below.

Australian government gives nod to 6 world leading crypto reforms

“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalize on the convergence between finance and technology,” Treasurer Josh Frydenberg said.

The Australian government is seriously consider the rollout of central bank digital currency (CBDC) and has backed numerous forward-looking regulatory crypto-proposals as part of a new “payments and crypto reform plan.”

Treasurer Josh Frydenberg says the reforms “will firmly place Australia among a handful of lead countries in the world.”

The reform plan is said to be the biggest shake-up of the Australian payments system since the 1990s, with part of the crypto-related groundwork set by the innovative proposals put forward by an Australian Senate Committee in September.

According to the Australian Financial Review, the government is in favor of six out of nine reforms proposed by the Senate Committee, including a licensing regime for crypto exchanges, laws to govern decentralized autonomous organizations and a common access regime for new payments platforms.

Two proposals relating to tax and financial compliance have been referred to their respective government bodies for consideration, while the government has knocked back another proposal related to renewable energy Bitcoin mining tax discounts.

Treasurer and deputy leader of the Liberal Party Josh Frydenberg outlined the government’s plans for crypto regulation, taxation and CBDCs in a speech today at the Australia-Israel Chamber of Commerce (AICC).

“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalize on the convergence between finance and technology,” he said.

Concerning CBDCs, an unnamed senior government source told The Australian on Dec. 7 that a retail scale “RBA [Reserve Bank of Australia] backed Bitcoin or cryptocurrency” is currently being considered, and will be a key element of the government’s regulatory reform on digital payments.

During his AICC speech, Frydenberg spoke bullishly on the crypto asset reform:

“For businesses, these reforms will address the ambiguity that can exist about the regulatory and tax treatment of crypto assets and new payment methods. In doing so, it will drive even more consumer interest, facilitate even more new entrants and enable even more innovation to take place.”

“For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and clarify the treatment of new payment methods,” he added.

One Senate committee proposal the government looks set to ignore is the 10% tax discount for Bitcoin (BTC) miners who use renewable energy. Michael Harris the head of corporate development at local exchange Swyftx, told Cointelegraph:

“We think this was a political consideration. The reality is that it’s probably going to be difficult for any government to segregate out an industry like BTC mining from other energy consumers, however laudable the intention.”

However Harris said that overall the “noises coming out of government at the moment are promising” as the government seems to have recognized the need to introduce consumer protection laws without stifling innovation.

“The devil will be in the detail though and we are especially keen to avoid a system that reduces customer choice by stacking the decks in favor of big, traditional financial players.”

Related: Australian women owning crypto has doubled in 2021: Survey

Crypto-friendly senator Andrew Bragg, who drove the recent crypto proposals, told Cointegraph in a statement that Frydenberg’s crypto and fintech reform plan will put “Australia on the tech map”:

“Australia will be a world-leading crypto hub under the Treasurer’s plan. Australian consumers will also benefit from new consumer protection rules.”

“The world is watching Australia which is now setting the global standard for crypto, payments and digital wallet reform,” he added.

Caroline Bowler, the CEO of local crypto exchange BTC markets welcomed the reforms, calling them a “major step forward to upgrade Australia’s one-size-fits-all regulatory framework in real-time.”

“It’s great to see that the gaps in Australian regulation relating to digital financial products and the exchanges who support them are being finally addressed at the highest level of authority, and the Coalition Government is not shying away from the big issues surrounding crypto, payments and de-banking,” she said.

India to set maximum penalty for violating crypto norms at fine of $2.7 million or 1.5 years in jail

The country wishes to see all crypto activities take place on platforms regulated by SEBI.

On Tuesday, BloombergQuint (Bloomberg India) reported that the penalty for non-compliance with the Indian government’s crypto policies could range from a maximum fine of 20 crore rupees ($2.7 million dollars) or 1.5 years in jail. Prime Minister Narendra Modi will likely give cryptocurrency investors a deadline to comply with new rules and declare their assets. While the regulatory environment in the country holds a high degree of uncertainty, reports have indicated that investors’ crypto must soon be held in exchanges operating under the oversight of the Securities and Exchange Board of India, or SEBI.

This would mean that private wallets would not be legal under the proposed legislation, and investors who use them could be subjected to the aforementioned judicial penalties. In addition, Modi’s government plans to institute a minimum capital threshold for investing in cryptocurrencies.

India is taking a hard-line stance against crypto due, in part, to the perceived rise in fraud, money laundering and terrorist financing in recent years. Another element, however, is that the competition from privately-owned or privately-issued cryptocurrencies would, in theory, threaten the Reserve Bank of India’s plans to launch a digital rupee. The official text from an ongoing controversial crypto bill in the country is as follows:

“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”