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Crypto worries of developing world may get G20 attention

NEW DELHI : Many developing countries differ from developed countries on legitimizing cryptocurrencies globally as a payment alternative because their cryptic and borderless nature could destroy their sovereign currencies in favor of the dollar, two people aware of the development said, citing possible talking points at the G20 summit.

The concern is shared globally and is one of the key issues to be discussed at the G20, especially under the Indian presidency, these people said, requesting anonymity.

“It is natural for the US to support cryptocurrencies since they are based in that country, they have tremendous influence, and they are valued mainly in US dollars, which promotes dollarization, which may not be acceptable to all countries. Therefore, a comprehensive deliberation on this matter is expected at G20,” said a senior official with direct knowledge of the matter.

Cryptocurrencies follow a decentralized architecture, making it difficult to control their trading across jurisdictions, even by the group of volunteers who control most cryptocurrency development. Much of the control is exercised through exchanges, which are distributed around the world.

During her visit to New Delhi on November 11, US Treasury Secretary Janet Yellen, without mentioning cryptocurrency, raised the issue of digital payment systems: “It is also clear that economic integration in the 21st century requires a modern international payment system . Cross-border payments should be cheaper than they are today. They also need to be faster, more transparent and easier to access. The G20 set out a roadmap for improving cross-border payments. We look forward to working with India to deliver tangible results.”

The second official mentioned above said that India is yet to take a position on this matter and that it will be determined only after thorough deliberation. “One thing is very clear: India will embrace technology. It also favors a digital payment system regulated by the Reserve Bank of India. But RBI is against allowing any digital asset to replace the sovereign currency for the country’s financial stability. Let’s see what the consensus is at G20,” he said.

HT reported on October 31 that crypto-assets, including cryptocurrencies, are expected to be one of the top agenda items for finance of G20 when India assumes its presidency in December. Finance Minister Nirmala Sitharaman said on November 1 that digital assets will be discussed at the G20.

Amanjot Malhotra, country head, India, at digital asset exchange Bitay said, “a lot of regulation” is expected for crypto assets, especially after the collapse of FTX, a major cryptocurrency exchange.

He said “a different approach at the G20 summit” is expected by different countries on this matter.

FTX, the second largest cryptocurrency exchange by volumes traded until recently, filed for bankruptcy earlier this month. “Cryptocurrencies are viewed differently by different countries. Developed countries like the US try to regulate it as much as possible as an asset class, which is ideal for both retail and institutional investors. On the other hand, we have … developing countries with weaker currencies that are trying to use it as a means of transferring value,” he said.

Rajagopal Menon, vice president at WazirX, said cryptos could have a “transformative” effect in developing economies by increasing financial inclusion. “Cryptos are a great hope for the unbanked masses. An internet connection is all you need to start participating in a formalized economy. .”

Archit Gupta, founder and CEO of Clear (formerly known as ClearTax), said: “Cryptocurrency is used everywhere as a virtual currency, and if it is used as ‘payments’, it can indeed undermine the sovereign currency if not not be regulated.”

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