In an era marked by escalating geopolitical tensions, ideological divides, and economic volatility, crypto assets have evolved from fringe experiments on the edge of the financial system into significant players at its core. No longer dismissed as niche technology, digital tokens now command both attention and influence within mainstream markets.
Global Leaders Urge Coordinated Action
During the International Monetary and Financial Committee (IMFC) meeting in April 2025, European Central Bank President Christine Lagarde emphasized the urgency for policy makers worldwide to address the challenges posed by crypto assets. She warned that, without prudent financial safeguards and enhanced international cooperation on regulation, the burgeoning crypto sector could expose the broader system to serious hazards.
Systemic Risks Highlighted by Financial Authorities
Lagarde’s warnings echo growing concerns from major standard-setting bodies—such as the Bank for International Settlements (BIS), the International Monetary Fund (IMF), the Financial Stability Board (FSB), and the Basel Committee on Banking Supervision (BCBS). According to their latest reports:
- Stablecoins, DeFi and Institutional Inflows: Rapid growth in stablecoins, decentralized finance (DeFi) platforms, and institutional crypto investments have pushed related risks into systemic territory.
- IMF’s April 2025 Global Financial Stability Report (GFSR): Since late 2024, Bitcoin has delivered impressive returns, and exchange-traded products (ETPs) tied to crypto now exceed $100 billion—evidence of growing retail and institutional adoption. At the same time, the stablecoin market’s combined valuation has surpassed $200 billion, fueled in part by optimistic expectations of forthcoming U.S. regulation.
However, alongside this expansion, volatility has returned: Bitcoin prices have dropped by as much as 25% from this year’s peaks. The IMF notes that equity market fluctuations now directly affect Bitcoin, underscoring a deepening link between crypto and traditional financial assets—meaning turbulence in digital tokens can reverberate throughout the entire financial system.
Furthermore, the IMF cautions that unchecked crypto adoption—particularly in emerging and developing economies—could trigger capital flight, undermine monetary sovereignty, and heighten illicit finance risks. To mitigate these dangers, the IMF recommends establishing clear legal frameworks, monitoring tokenization processes, and following the joint FSB–IMF roadmap for global crypto governance.
Why Coordinated Oversight Is Critical
Leading regulators agree that only robust, harmonized regulation can curb crypto-related threats effectively. A unified global supervisory structure would minimize regulatory arbitrage, deter illicit activity, preserve financial stability, and encourage responsible innovation. Entities such as the ECB, IMF, BIS, FSB, International Organization of Securities Commissions (IOSCO), and BCBS have repeatedly stressed that crypto assets can no longer be treated as marginal. Their deepening integration demands a comprehensive policy response that spans jurisdictions
India’s Regulatory Conundrum
Against this backdrop of collective action, India’s relative silence on a holistic crypto framework is surprising—and potentially perilous. Although Indian authorities have taken isolated steps on taxation and anti–money laundering guidelines, no broad regulatory architecture or clear policy stance has emerged. This hesitation is all the more puzzling given India’s leading position in the G20’s crypto roadmap discussions.
Without a coherent strategy, India risks lagging behind global efforts to safeguard both domestic and international financial stability. Stakeholders must recognize that effective regulation is not about stifling innovation; rather, it’s about channeling creativity into secure, transparent, and sustainable avenues.
Charting the Path Forward
The debate today is not whether crypto should be regulated, but how—to ensure that digital assets enhance, rather than jeopardize, the integrity of the financial system worldwide. A coordinated approach will help maintain confidence, foster responsible growth, and secure both national and global economic resilience.
