Finance Minister Nirmala Sitharaman tabled the Economic Survey 2022-23 in Parliament today, kicking off the Union Budget session. As per the report, India’s GDP growth is said to be the lowest in three years, at 6-6.8 per cent. Inflation was pegged at 6.8 per cent for the current fiscal. Amidst all this, a mention of crypto assets and a call for their regulation made its way into the Economic Survey for the first time ever.
Making a reference to the recent FTX collapse and the ensuing sell-offs that saw the vanishing of nearly $2 trillion from the global crypto market, the Survey noted that crypto assets don’t “strictly pass the test of being a financial asset” as it has no intrinsic cashflows attached to them. This falls in line with RBI Governor Shaktikanta Das’ stand on crypto, who said that private cryptocurrencies are completely speculative and that they should be prohibited.
The survey noted, “The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments.”
“There are minimal global standards applicable to unbacked crypto assets, which do not currently mitigate all risks and vulnerabilities. Even as Standard-Setting Bodies (SSBs) have been making efforts to adjust and develop standards, these remain mainly focused on specific issues (financial integrity), sectors (payments, securities and banking), products (global stablecoins), or entities designated as systemic by domestic authorities,” the Survey noted.
“Thus, there are regulatory gaps at each stage when crypto assets are issued, transferred, exchanged, or stored by non-bank entities.”The crypto industry was quick to react to the reference of crypto in the Economic Survey this year. CoinSwitch co-founder and CEO Ashish Singhal took to Twitter to laud the call for regulation of crypto assets, appreciating the fact that this was better than wishing away crypto entirely.
“Regulatory void and lack of accountability tend to enable bad actors, and leave everyday users and investors with little to no legal recourse,” Singhal tweeted.
Edul Patel, the CEO and co-founder of Mudrex, told “Cryptocurrency has rapidly gained popularity worldwide. The recent FTX crash has prompted governments to draft regulations to prevent similar incidents and protect the public’s funds. Implementing comprehensive regulations is crucial for fostering innovation and combating financial crimes such as money laundering and fraud.”
He added, “India cannot regulate cryptocurrencies alone, as they are a global phenomenon. Hence, India’s call for the establishment of global regulatory standards that can adapt to future changes is a forward-thinking approach.
With India holding the presidency of the G-20 summit this year, the topic of cryptocurrency is also being discussed among the member countries. This provides India with the opportunity to set the tone for global regulation of cryptocurrencies.”