G20’s Crypto Masterplan Revealed – No More Bans

• G20 forum, under India’s leadership, commissions a comprehensive policy roadmap.
• Norms from the FSB, IMF, and other international bodies are consolidated into a single report.
• The report stresses the need for robust regulatory oversight for crypto-assets.

In a comprehensive policy roadmap presented by global standard-setting organizations, the idea that merely banning cryptocurrency won’t suffice to eliminate its risks is gaining prominence.

This forward-thinking document, commissioned by the intergovernmental G20 forum under India’s leadership, amalgamates norms outlined by the Financial Stability Board (FSB), the International Monetary Fund (IMF), and other international standard-setters for the cryptocurrency sector into a single, coherent report.

The report unequivocally states that “comprehensive regulatory and supervisory oversight of crypto-assets should be a baseline to address macroeconomic and financial stability risks. Scheduled for presentation to the G20 this weekend, the IMF-FSB synthesis paper is part of a broader initiative by international bodies to establish global standards for the cryptocurrency industry.

Catastrophic crypto events in 2022 triggered the policy

This endeavor has been prompted by the numerous collapses of crypto enterprises witnessed in 2022. To address macroeconomic risks associated with cryptocurrencies, the report prescribes that jurisdictions should “strengthen monetary policy frameworks, guard against excessive capital flow volatility, and adopt unambiguous tax treatment of crypto-assets.”

Importantly, it echoes the IMF’s perspective that sweeping bans on cryptocurrencies may not effectively mitigate associated risks, especially in the context of emerging economies. Countries like India have raised concerns about the heightened threat posed by widespread crypto usage to the monetary policies of emerging economies.

They have urged policy bodies to consider stronger prohibitions or targeted measures to address these specific concerns. However, the report also cautions against imposing blanket bans that criminalize all crypto activities, including trading and mining, within a single jurisdiction.

Such bans are not only costly and technically challenging to implement but could also result in crypto-related activities migrating to other jurisdictions, thereby creating spillover risks. The report emphasizes that “restrictions should not substitute for robust macroeconomic policies, credible institutional frameworks, and comprehensive regulation and oversight, which are the first line of defense against the macroeconomic and financial risks posed by crypto-assets.”