The Indian government is working on a consultation document on how to regulate cryptocurrencies. The World Bank, the IMF, stakeholders and other interested parties took part in the consultation.
The Indian government’s line on cryptocurrencies has been anything but clear so far. However, its own central bank, the Reserve Bank of India, has made it very clear that it believes cryptocurrencies are a threat to macroeconomic stability and appears to be interested in an outright ban.
As reported by the Times of India, Economic Affairs Secretary Ajay Seth expressed a desire to work globally to properly regulate cryptocurrencies. He said:
“We consulted not only national institutional actors, but also institutions such as the World Bank and the IMF. Therefore, we hope that we will soon be in a position to finalize our consultation document.”
He added that his country has started working on global regulations and stated that countries would not be able to succeed in their cryptocurrency regulation unless there was broad consensus across economies.
The fact that global financial institutions like the IMF are involved with Indian thinking on how to regulate cryptocurrencies may be a cause for concern in cryptocurrency circles.
The IMF has been highly critical of the cryptocurrency sector so far, warning El Salvador, for example, about the repercussions of adopting bitcoin as a legal tender in the country alongside the dollar.
The world’s elite banking and financial institutions have a lot to lose if Bitcoin becomes even more entrenched as a place for investors to gather, as the dollar and other fiat currencies around the world continue to devalue.
It remains to be seen to what extent any extremely negative regulation of the cryptocurrency sector will be respected as the world’s citizens try to cope with declining purchasing power on the one hand and runaway inflation on the other.
There is a lot of talk about how investors are being tricked by some of the Ponzi crypto schemes, but little is mentioned about why investors are there in the first place. Virtually zero returns and an outdated banking system that is not fit for purpose could be just some of the reasons.