At G20 meet, on Sept 7, 2023, a synthesis paper on cryptocurrency has been placed. It has put forth a comprehensive road map and building blocks for each country. Finance deputies have discussed the need for a template to regulate crypto assets, including a way forward to put into effect the IMF, Financial Stability Board (FSB) and a standards setting body.

A single country in isolation cannot handle the issue of cryptos effectively because of the pull and push of technology. It has implications on macro-economic stability.

All this will pave the way for global regulatory framework for cryptos.

The IMF synthesis and FSB paper says cryptos should not be granted official currency or legal tender status. However, the report argues that a blanket ban is not easy — technically demanding to enforce and hence costly. Central Banks should avoid holding cryptos as official reserve as they pose a risk to monetary and financial stability. It stressed unambiguous tax treatment of cryptos.

Policy makers should guard against excessive capital outflow. Cryptos pose risks to emerging and developing economies.

Credible institutional frameworks and comprehensive regulation and oversight are the first line of defence against macro-economic and financial risks posed by the cryptos. The countries should adopt Financial Action Task Force (FATF) standards.