India raises global cryptocurrency regulatory framework issue ahead of the G20 Summit

As cryptocurrency and NFTs become the norm, countries across the world are asking for a global regulatory framework for controlling cryptocurrency. The latest bid for a global cryptocurrency regulatory framework comes from India.

The Indian Prime Minister Narendra Modi called for setting up universal guidelines and regulations for cryptocurrency transactions especially in times of AI-enabled financial frauds.

The Indian Prime Minister highlighted the safety concerns associated with cryptocurrency transactions and the need to establish ethical usage of crypto and AI at the recently concluded three-day B20 Summit held in New Delhi on August 27. B20 is the business dialogue forum created for all G20 countries.

This comes at a time when the EU has backed stricter tax regulations for cryptocurrencies and advocated a global approach towards adopting its crypto asset rules.

India is currently leading the G20 Presidency and they are using the platform to push for a global cryptocurrency regulatory framework. Earlier on August 1, India put forward a presidency note favouring a regulatory framework for cryptocurrency. The measures suggested in the presidency note are in line with the International Monetary Fund (IMF) outlook. It also follows the guidelines laid down by the Financial Action Task Force (FATF) and the Financial Stability Board (FSB).

India specifically outlined measures that cater to the specific needs of developing economies which are often unequipped to deal with cryptocurrencies, especially in the absence of a proper regulatory framework. It was declared through the presidency note that a synthesis paper underlining the issue would be launched jointly by the IMF and FSB by the end of this month (August 2023).

In the paper, the IMF will clearly state the global macro implications related to cryptocurrencies. As the G20 Presidency Note from India came just before the start of the G20 Summit on September 9, all eyes are on the global cryptocurrency regulatory framework development.

Call for global consensus to address concerns

The Indian Prime Minister spoke about India's belief in comprehensive global efforts and he hoped that the world would come together to create a global cryptocurrency regulatory framework that will promote ethical usage of technology.

Prime Minister Modi highlighted the fast-paced advancement of technology in today's world which calls for effective regulations of all emerging technologies including Artificial Intelligence (AI) and cryptocurrency. Modi emphasised taking urgent action, saying that there is no point in ignoring the rapid advancement of technology. The goal should be adopting a unified approach that democratises the use of technology, said the Indian Prime Minister.

According to him, a global unified approach is needed to set up a global regulatory framework for cryptocurrencies and AI. Modi stressed building a global consensus for creating such a regulatory framework, one that addresses the concerns of the global south, especially the developing nations.

The Indian Prime Minister cited the air traffic control measures as an example to develop a framework. According to him, the common rules and regulations for air security apply to all stakeholders governing the aviation sector, and emerging technologies like AI and cryptocurrency also require the same.

In addition, the Enforcement Directorate of India detected a loss of over £8 billion from crypto scams in January this year.

The Indian Prime Minister made it clear that India's agenda in the upcoming G20 Summit would be to initiate conversations related to the impact of cryptocurrencies on a broad range of macroeconomic issues. Cryptocurrency regulation will be an essential part of that discussion initiated by India as the G20 Presidency.

The focus will be on emerging and developing economies.

Talks on a global cryptocurrency regulatory framework could be a revolutionary step as people across the world have been asking for such crypto regulations for a long time now. According to the US Federal Trade Commission, more than 46,000 people in the US were subjected to cryptocurrency scams in 2021, leading to a collective loss of over £789 million.

One out of every four dollars spent on cryptocurrency was lost because of such scans. The average loss per person was £2,000 with the people losing most in Bitcoin (70%) scams followed by Tether (10%) and Ether (9%). The FTC report further highlighted how crypto scams increased 60 times between 2018 and 2021 as the scammers exploited many features associated with cryptocurrencies.

The 2022 Crypto Crime Report by Chainalysis revealed that the world lost over £11 billion in crypto scams in 2021 and a 79 per cent rise in such cryptocurrency frauds compared to 2020.