Governments, Global Finance Bodies Want To Bring Crypto Under Regulation

Globally, governments and regulatory agencies are calling for regulations in crypto in view of the rising instances of fraud and others illegal activities involving such virtual digital assets, besides the growing concerns about carbon footprint, among others.

Union Finance Minister Nirmala Sitharaman pushed for a global strategy on crypto and other digital assets at a meeting with International Monetary Fund (IMF) chief Kristalina Georgieva on Wednesday. Previously, the newly elected Prime Minister of the UK, Liz Truss, had also called for crypto inclusivity on the subject of digital assets.

Around $1.9 trillion dollars have been wiped off the crypto market since last November, from its high to $2.96 trillion as of November 20, 2021. At present, the crypto market cap stands at $1.03 trillion. The crypto market is also under constant threat from hackers, as $1.9 billion dollars have been stolen in hacks in the January-August 2022 period, according to a Chainanalysis report published in August 2022.

RECENT INITIATIVES ON CRYPTO REGULATION WORLDWIDE

Here is a list of recent initiatives on crypto regulations worldwide

Sitharaman For Global Push On Crypto Assets

Union Finance Minister Nirmala Sitharaman on Wednesday called for a unified worldwide strategy for regulating digital assets, during a meeting with Kristalina Georgieva, managing director of International Monetary Fund (IMF).

She encouraged the IMF to take the initiative on crypto regulation.

Following the meeting, Georgieva said in a Tweet: “The IMF stands ready to work with the Finance Ministry of India on climate change, crypto regulation, and other global challenges of our times.”

Sitharaman has urged for a global framework to control cryptocurrencies, and has cautioned about the dangers of money laundering and the global financing of terrorism through crypto. She emphasised that no nation could manage these dangers independently, and that crypto can only be controlled when nations decide to tackle this issue in unison.

In February 2022, India introduced a 30 per cent tax on crypto earnings, with effect from April 1, 2022. Moreover, it was also decided to levy a 1 per cent tax deduction at source (TDS) on payments of virtual assets exceeding Rs 10,000, and taxation of such gifts in the hands of the recipient.

US White House Report

In a new report released on Thursday, the White House Office of Science and Technology Policy urged the United States to perform additional research on the energy effect of cryptocurrency mining, and accordingly define industry standards.

Crypto mining activities in the US consumes as much energy as all home computers or all household lighting, according to an assessment by the White House. The research comes amid growing concern about the amount of energy used by cryptocurrency mining companies.

To generate new tokens and validate transactions, cryptocurrency mining requires a network of computers to solve complex mathematical equations. Bitcoin, the largest crypto by market cap, runs on a ‘proof-of-work’ mechanism, which uses lot of energy. However, Ethereum, the second largest crypto by market cap, is currently shifting to a different mechanism, which requires 99.9 per cent less energy.

“Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and the Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining,” the report said.

US Federal Reserve Chairman Jeremy Powell On Crypto Regulations

On Thursday, Federal Reserve Chairman Jerome Powell called for a Stablecoin legislation during a speech at a conference at Cato Institute, a monetary think tank.

“We don’t want to stand in the way of appropriate innovation. We think that something like that which is purporting to be money would need to be appropriately regulated. I think you need regulation. If people are going to think something is money, it needs to have the qualities of money. I don’t think you want to take money and make it into just another consumer product,” Powell said at the conference.

US SEC on Crypto Regulations

According to Gary Gensler, the chairperson of the US Securities and Exchange Commission, more regulation is necessary to ensure public and investor confidence in cryptocurrencies.

He this through a video-call at a start-up founders and investors event during the NYC Summit. “This field will not take off unless you have some trust,” he said at the conference.

The SEC has been in conflict with the crypto industry, long before Gensler took over the agency in April 2021, over rules that should be applicable to decentralised projects, such as those in place for equities or bonds.

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