Synthesis note on regulating crypto assets circulated among G20 members

Finance deputies to meet this week to discuss debt distress, digital public infra

Ahead of the G20 leaders' summit, the Financial Stability Board (FSB) and the International Monetary Fund (IMF) have circulated their synthesis paper on regulating crypto assets among the member countries, official sources said. The paper, it is learnt, has set out policy approaches and a comprehensive roadmap for the countries and is expected to be made public on September 7.

Further, the finance deputies of the G20 countries will meet this week on September 6 and September 7, in the run-up to the leaders’ summit, to discuss some of the issues relating to debt distress and digital public infrastructure. India has been elected to co-chair the Global Partnership for Financial Inclusion (GPFI), with Italy, for the next three years. The GPFI is an inclusive platform for G20 countries, interested non-G20 countries, and relevant stakeholders to carry forward work on financial inclusion.

In its initial report on regulating crypto assets released in July, the FSB had called for a raft of measures, including data collection and reporting, cross-border cooperation, a governance framework, and regulatory power for authorities. But the FSB report, while covering the risks to financial stability, had not addressed the key concerns of India around crypto assets.

The report said that it does not comprehensively cover all specific risk categories related to crypto-asset activities, such as anti-money laundering, combating the financing of terrorism, data privacy, cybersecurity, consumer and investor protection, market integrity, competition policy, taxation, monetary policy, and monetary sovereignty.

Timelines for resolving debt distress

Among many issues, consensus has to be built on the matter of debt distress and whether there is a need to set strict timelines for countries in terms of resolving the debt. “At this point, several countries would like to do it much faster and with a much larger scope. There is a very strong desire for countries to work towards this, but the question is around ambition levels and timelines. That has been a difficult one to agree on,” an official source said.

The leaders’ summit is expected to discuss several pieces on strengthening the reforms for multilateral development banks. While there is broad consensus on how the existing capital can deliver better, discussions are on for improving their operations and the need for further capital and other resources. “A wholesome package for MDBs should get the leaders’ support,” the source added.

India’s G20 presidency is hopeful of releasing a communique at the end of the leaders’ summit despite geopolitical issues being a sticking point so far. “Last year, there was only an un-negotiated chair summary. So far, in the finance track, there have been two outcome statements. All paragraphs are negotiated and agreed with, except two paragraphs on geopolitical issues,” the source said.