B20 Summit: PM Modi pushes for global framework to deal with cryptocurrencies

Prime Minister Narendra Modi has said that an integrated approach is needed to deal with issues related to cryptocurrencies. Addressing the B20 Summit in New Delhi, PM Modi also raises significant questions regarding global issues such as climate change, energy sector crisis, food supply chain imbalance, water security, cyber security, which can be solved with mutual cooperation.

The PM stresses the need for a more integrated approach in the matter of cryptocurrencies and suggested creating a global framework where issues of all stakeholders can be addressed. He also speaks about a similar approach needed regarding artificial intelligence.

Highlighting the buzz and excitement around Artificial Intelligence (AI), the Prime Minister draws attention to some ethical considerations regarding skilling and re-skilling, and concerns regarding algorithm bias and its impact on society. “Such issues have to be resolved together. Global business communities and governments will have to work together to ensure that Ethical AI expands,” he asserts on sensing the potential disruptions in different sectors. 

In the G20 summit, slated to be held in Delhi on September 9-10, G20 nations are likely to discuss on bringing global crypto regulations for the regulation, supervision and oversight of crypto assets and activities.

In her visit to the U.S., Finance Minister Nirmala Sitharaman had also stressed on the need for immediate action on cryptocurrency. While attending a session on “Microfinancial implications of crypto assets” at IMF (International Monetary Fund) headquarters in April this year, Sitharaman had said that cryptocurrencies issue requires immediate attention from the G20 countries.

Sitharaman had said that G20 acknowledged the work of the International Monetary Fund and Financial Stability Board in bringing out key elements of policy and regulatory framework and that a synthesis paper that would integrate macroeconomic and regulatory perspectives of crypto assets is required.

The Indian government is yet to come up with comprehensive legislation on cryptocurrencies, though it has taken some steps to curb its misuse of illegal activities. In March this year, the government brought all types of crypto businesses, including trading, safekeeping and related financial services, under the Prevention of Money-Laundering Act, 2002.

In a notification, the department of revenue under the finance ministry said any exchange between virtual digital assets and fiat currencies; the exchange between one or more forms of virtual digital assets; and the transfer of digital assets would be covered under the said Act.

Earlier, the government had announced a 30% tax on crypto in the Union Budget 2022. It also said a 1% TDS will also be held back each time an investor sells a virtual digital asset over a certain threshold. The new rule mandates a person, who is responsible for paying any resident any sum by way of consideration for the transfer of a virtual digital asset (VDA), to deduct an amount equal to 1% of such sum as income tax.

Despite the growing crypto industry in India, the Reserve Bank has cautioned against risks associated with virtual currency. The RBI in December 2022 said under India’s G20 presidency, one of the priorities for the government is to develop a framework for global regulation, including the possibility of prohibition of unbacked crypto assets, stablecoins and DeFi.