Global standards for crypto need to be “comprehensive and consistent; regulatory responses must be based on standard taxonomies, reliable data to address contagion effects, and flexible enough to be adjusted in the future based on market developments and future international standards,” according to the Economic Survey released by the Indian government for 2022-23. The survey, prepared under the aegis of Chief Economic Adviser V. Anantha Nageswaran, noted that the crypto asset market has been volatile which has brought to the forefront their fragile backing, governance problems, increasing complexity and non-transparency. “The geographically pervasive nature of the crypto ecosystem necessitates a common approach to the regulation of these volatile instruments,” read the survey. Why it matters: The survey is of paramount importance as it is a critical document which sheds light on how the Ministry of Finance thinks about the state of the Indian economy, and its challenges. The risks posed by crypto to financial stability makes the survey’s thoughts on crypto regulation relevant in ascertaining the government’s approach towards cryptocurrencies. The survey said that the recent collapse of FTX, a crypto exchange, and the ensuing sell-off in the markets put spotlight on the vulnerabilities in the ecosystem. Therefore, the survey noted that the issue of crypto asset regulation has moved up the policy agenda of many nations including international fora like OECD and G20, highlighting a need for a globally coordinated approach. What are the challenges: The survey said that crypto regulation is tricky, and it is hard to keep…
