Global cooperation needed to regulate crypto: Sitharaman tells Parliament

business-standard.com:

Cryptocurrencies require international collaboration to "prevent regulatory arbitrage", Finance Minister Nirmala Sitharaman told Lok Sabha on the first day of Parliament’s Monsoon Session.

The government is seeking international collaboration on regulating cryptocurrencies comes as the Reserve Bank of India (RBI) has said that it seeks prohibition on such digital assets.

"...any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” said Sitharaman.

She said that the RBI has suggested banning cryptocurrencies because it believes the assets could endanger the economy.

“RBI mentioned that cryptocurrencies are not a currency because every modern currency needs to be issued by the Central Bank / Government. Further, the value of fiat currencies is anchored by monetary policy and their status as legal tender, however the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored, so it will have a de-stabilising effect on the monetary and fiscal stability of a country."

“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage," Sitharaman.

RBI governor Shaktikanta Das has called cryptocurrencies a “real danger”, listing their risk in the annual report of the central bank.

Anything that derives value based on make-believe, “without any underlying", is just speculation under a sophisticated name, the RBI has said in its annual report.