G20 Summit: Here's why it is crucial for crypto players across the world

As the world's attention turns to India, the host of this year’s G20 summit, which will be taking place on September 9th and 10th in New Delhi, the crypto players across the world are eagerly anticipating discussions that could shape the future of digital currencies on a global scale. This is because India has been pressing for global regulations that prevent regulatory arbitrage in the space during the Finance Track of G20 meeting throughout the year. And now, with delegates from the world's most influential economies converging in the capital, stakeholders are waiting with bated breaths to see how the discussions pan out into regulations.

International framework expected

Stakeholders in the Indian crypto industry highlight that the summit would most likely draw insights from organizations like the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to craft a comprehensive regulatory roadmap. 

Edul Patel, co-founder of Mudrex, explained, "India recognizes the global nature of cryptocurrencies and advocates for cooperative measures to regulate them effectively. Drawing on discussions and insights from organizations like the IMF and the FSB, a comprehensive regulatory roadmap is being devised. The upcoming G20 summit in New Delhi will address the need for enhanced global regulation of crypto assets.”

It is worth noting that the Indian Finance minister Nirmala Sitharaman has mentioned during Finance Track meetings that India is spearheading global regulations around crypto assets as the G20 President. This is being done to prevent crypto players from benefitting from the non-uniform nature of regulations on crypto across the world. 

On Thursday, a policy paper commissioned by G20 under India’s leadership was published with inputs from the Financial Stability Board (FSB), the International Monetary Fund (IMF) and other international standard-setters for the crypto sector.

Stakeholders expect regulations for crypto exchanges, brokerages

On the same lines, Shivam Thakral, CEO of crypto exchange Buycoin said that the industry expects a framework on how stakeholders like crypto exchanges and brokerages might work, to ensure retail investors are protected from the volatility 

He said, “India’s presidency at the G20 can bring together a collective worldwide effort to regulate and harness deep tech to its full potential. The recent acknowledgment of a much-needed regulatory framework for AI & Crypto will instil confidence among the Indian masses that have already adopted some forms of AI or Web3 in their lives while the industry has set its eye on upcoming G20 meetings for more clarity."

One way to ensure retail crypto investors are protected is by ensuring that institutions and big players do not indulge in regulatory arbitrage. In early August, India released a ‘Presidency Note as an input for a Roadmap on Establishing a Global Framework for Crypto Assets’ that aims to minimise consumer and other risks derived from crypto-assets, while respecting jurisdictional contexts.

Retail investors in focus

Om Malviya, President of Tezos India, a blockchain network, stressed that a uniformity in regulations will safeguard retailers from risks associated with cryptocurrencies.

“Global coordination of crypto regulations is imperative in today's interconnected world. The crypto space is evolving rapidly, and as it does, it becomes increasingly important for countries to collaborate and establish a uniform, crypto-friendly policy framework. A discussion on crypto policy within the G20 summit would be a significant step forward. It can pave the way for a more coherent and balanced approach that fosters innovation while safeguarding against risks," he said.

Curbing money laundering, terror financing top priority

Apart from protecting individual small-time investors, a uniform regulatory step that could emerge from G20 deliberations is also expected to curb money laundering, terror financing, and market manipulation. Home Minister Amit Shah was vocal about the role of cryptocurrencies in terror financing during the 'G20 Conference on Crime & Security in the age of NFTs, AI & Metaverse.'

Manhar Garegrat, Country Head for India and Global Partnership at Liminal, a crypto wallet infrastructure and custody solutions platform, said that the deliberations would focus on ensuring cryptocurrencies are not misused for such activities.

He said, “With a global regulatory framework in place, we can expect to better tackle challenges such as money laundering, terrorist financing, and market manipulation. We have already seen glimpses of this positive impact with the Travel Rule framework created by the FATF and supported by exchanges, custodians, and other virtual asset service providers.”

More power to the taxman?

Industry insiders also expect the deliberations to strengthen the cause of the taxman, with some expecting a two pillar taxation framework being proposed.

Patel from Mudrex noted, “It is possible that the summit may come up with a two-pillar framework for taxation. Additionally, they might explore the exchange of tax-related information between countries for non-tax purposes, signifying a broader international collaboration. It is crucial to develop regulations that take into account the perspectives and interests of diverse stakeholders. Such steps will not only instill investor confidence within India but also on a global scale, paving the way for better financial inclusion and innovation."

How has India adopted blockchain?

But, in light of the increased demand for global regulations, stakeholders fear that the new frameworks might end up strangling innovation. Kavita Gupta of Delta Blockchain Fund, a crypto based early-stage venture capital fund, said, "Regulations should be spearheaded in a way that innovation is not curbed; that we don’t lose out on real-world use cases of the underlying technologies.”

Gupta is an Advisor to the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce

She added that India should use the Presidency as an opportunity to showcase the various real world usecase of the technology, which are presently being applied across the country.

She said, "India can actually show the world how the technology is being used in day to day lives across the world. For example, the Maharashtra government has issued over 65,000 tribal caste certificates using a public blockchain in Gadchiroli, while the West Bengal government plans to maintain land records in New Town, Kolkata, by minting their non-fungible tokens (NFT). These are all real-world use cases that are important examples of Web3 applications."

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