Global warnings mount as India faces urgent need for Crypto regulation

New Delhi, 05 February 2025

The rapid rise of Virtual Digital Assets (VDAs) has transformed global finance but comes with significant risks. Global Standard Setting Bodies (SSBs) like the IMF, Financial Stability Board (FSB), and IOSCO warn that extreme market volatility, speculative trading, and security flaws make investors vulnerable. Worse, the growing link between VDAs and traditional finance threatens systemic stability, potentially impacting banks and economies.

Adding to these concerns are cyberattacks, governance failures, and scams. USD-backed stablecoins also raise alarms over monetary sovereignty, potentially weakening local currencies and central bank control. Fraudulent schemes like BitConnect and GainBitcoin have already caused massive investor losses, highlighting the urgent need for regulation.

The Government of India is revisiting its cryptocurrency policy, with the Department of Economic Affairs (DEA) and the Reserve Bank of India (RBI) reassessing a discussion paper. Shifting global regulations, especially on stablecoins, have complicated the debate. Meanwhile, SSBs have outlined clear regulatory roadmaps. The IMF and FSB issued a joint framework in 2023, and IOSCO finalized crypto market guidelines, with reviews planned for 2025-26. The Basel Committee also updated crypto-asset standards, requiring stricter financial disclosures by 2026.

In response, many nations are adopting regulations for VDAs, stablecoins, and crypto service providers to ensure financial stability and consumer protection. India must act now, leveraging global frameworks to implement cybersecurity mandates, transparency requirements, and investor safeguards.

Delaying regulation is no longer an option. Swift action will not only protect India’s financial system but also position the country as a leader in responsible crypto development.

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