Regulating crypto needs global template, says FM Nirmala Sitharaman

Sitharaman, however added that it does not mean that India is in favour of 'controlling' the technology that drives digital currencies

A "global understanding and template" is required to regulate cryptocurrency, Union Finance Minister Nirmala Sitharaman said Sunday.

She was speaking at an interaction programme organised by Thinkers Forum, Karnataka.

"No one country individually in a matter of technology-driven crypto asset can effectively control it because technology doesn't have any borders," Sitharaman said. "So, the very character of it being technology-driven requires all countries to be on board. If you were to regulate here and not elsewhere, it won't be effective," she said.

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That does not mean that India is in favour of "controlling" the technology that drives digital currencies, Sitharaman said. "The distributed ledger technology has its goodness, potential and strengths. We keep that in mind," she said.

According to Sitharaman, platforms such as the G-20, Organisation for Economic Co-operation and Development (OECD), International Monetary Fund (IMF) and World Bank recognised the need for a global effort. "All of us have to work together. Otherwise, regulating crypto may not be effective," she said.

The minister pointed out that the G-20 under India's presidency has kept digital currencies on its agenda. "Also, IMF has given a paper on crypto and how it can affect macroeconomic stability. The Financial Stability Board (FSB) has also agreed to give a report. The FSB and IMF reports will be discussed in July when fininace ministers and central bank governors will meet," she said. "In September, there'll be a summit of PMs and presidents of G-20 nations in India."

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Sitharaman explained that digital currencies involved technology that is "very distributed" in which "sometimes identity is difficult to be established".

'No plan to regulate finfluencers'

To a question, Sitharaman said there is no proposal to regulate financial influencers or finfluencers. “At this stage, I'm not having any proposal before me to regulate financial influencers. Social influencers and financial influencers are all out there. But a very strong sense of caution is required in each one of us to make sure that we double-check, counter-check and talk with people,” she said, referring to financial advice being provided by the finfluencers.