Nirmala Sitharaman, finance minister of India discussed the significance of crypto regulation with the managing director of the International Monetary Fund (IMF) Kristalina Georgieva.
India has long focussed on the need for regulation along with global coordination with a mutually agreed approach to this issue.
Sitharaman also mentioned that the IMF should take lead in terms of ensuring proper regulation in this sector.
IMF managing director, Kristalian Georgieva and India’s FM has had a discussion regarding a wide variety of issues which included India’s incoming G20 presidency and IMF’s support.
India continues to hold a bright spot in the global economy although there is global geopolitical uncertainty as mentioned by the IMF MD.
India has also introduced a 30 per cent tax on crypto assets effective April 1. Along with that, India has also imposed a 1 per cent tax deducted at source (TDS) on crypto.
This TDS will have to be paid on transactions above Rs 10,000 (USD 125 approximately) and this shall be applicable in the hands of those receiving from July 1.
Shared Concerns Regarding Crypto
Finance Minister and IMF Chief have the same concerns regarding the risks that cryptocurrencies pose.
It also poses risks to the global economy and also cross-border effects given the geo-political circumstances along with tighter financial conditions. The Finance Minister had also emphasised that there needs to be energy security.
India wants to focus on the importance of coordinated policy measures along with multilateralism for gathering adequate resources for climate action. It is so because dedicated funds by developed economies are yet to be utilised as they have not been made available.
India’s FM also states that carbon pricing might not have been a feasible policy tool for climate action.
Concerns Regarding Terror Financing And Money Laundering
Sitharaman in the meeting of IMF and World Bank in April has called for a framework globally which could regulate cryptocurrencies.
Crypto carries great risks pertaining to money laundering and terror financing for all other countries too.
It is natural that no country can handle such risks alone and there needs to be regulation from all different countries coming together on this matter.
The Financial Minister also agreed that there must be a timely conclusion of the 16th general review of quotas that would address inequity and imbalance within the global economy.
Georgieva had also agreed that for IMF to remain relevant, the general review of quotas has to be reached to reflect the changed status of other market economies across the whole world.
IMF quotas are the primary source of IMF funds and that determines voting shares. Quotas are reviewed every five years however there can be delays in the same.
India’s quota is 2.76%, China has 6.41% and the U.S has 17.6%. Quotas are to be decided depending on a country’s GDP, economic openness, economic variability along with international reserves.