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It is not news that the Indian government’s relationship with cryptocurrency is that of animosity. The authorities love blockchain technology – but have nothing nice to say about cryptocurrencies. It is that very reason that India’s Finance Minister Nirmala Sitaraman introduced a bill to outlaw crypto trading in the 2022 financial budget.

And while the cryptocurrency market isn’t a fan of this take, IMF and the US government are.

In the recent G20 summit, India’s support for introducing a global task force to deal with the financial issues caused by Bitcoin was met with support from the International Monetary Fund and the United States.

There Must be an Effort to Create a Common Framework – India

Indis seeks a collective global effort to deal with crypto-led financial issues. And in its recent seminars for the G20 members, it has asked other countries to join hands and come up with a common and legitimate framework.

And the worse part about this meeting is that “banning” remains an open option.

The US Treasury Secretary Janet Yellen, however, is of a different mindset. She told Reuters that while there is no outright banning for crypto-related activities, there must be a strong regulatory framework in place.

However, IMF Managing Director Kristalina Georgieva has said after co-charing a meeting with Finance Minister Nirmala Sitharaman that banning cryptocurrencies should be a legitimate option.

IMF has recently laid out a nine-point action plan for how countries should treat cryptocurrencies. And the first point of that plan is to not let any crypto asset get a legal tender status.

India’s Stance on Crypto has Always Been Filled with Anymosity

The Indian government has always been staunchly against the purchase and sale of cryptocurrency assets. Prime Minister of India, Narendra Modi, has gone as far as to say that “Crypto is corrupting India’s youth.”

He has voiced most concerns about the unregulated nature of cryptocurrency markets and how they can be used for nefarious purposes, such as money laundering and terror financing.

In late 2021, he spoke at Australian Strategic Policy Institute and said –

It is important that all democratic nations work together on this and ensure it does not end up in the wrong hands, which can spoil our youths.

The same stance has been the narrative of RBI – Reserve Bank of India. RBI Governer has, on more than one occasion, said that cryptocurrencies are dangerous to the financial integrity of the country because of their speculative nature.

Regulation is Needed in the Crypto Space, But Banning is Not a Solution

Crypto assets have always been seen as a wild west of the financial ecosystem, and for a good reason. For one, they are speculative assets that rise and fall on the whim of a community’s sentiment. Secondly, their volatile nature led to massive losses for investors who happened to invest at the wrong time. And the most important reason is that it is hard to find the “right time” to invest in crypto assets.

People try to buy the dip, and when they do, sometimes, the asset drops to further lows before collapsing.

That level of uncertainty is nothing new. However, when there are bad actors in the background, which has been the case since the beginning, you get manipulators who seek to scam people. Also, there has been a huge influx of cryptocurrencies – out of which many of them are prepped to create rug-pulls.

And there are issues like money laundering and cyber-security risks that make it warranted to introduce more regulations to the space.

But outright banning cryptocurrencies is not an ideal solution. Experts say that banning something can create even more nefarious elements to penetrate the cryptocurrency space, which would make it even more difficult to control.

Another reason that experts have given is the concept of Web 3 becoming more mainstream. Decentralization is the path technology has taken right now, and many businesses have started to adopt it. Banning cryptocurrencies can undermine these businesses severely.

Progressive Regulations Can Make the Crypto Space Better

Cryptocurrencies have always been on the receiving end of regulatory issues – and these problems have exasperated thanks to the recent FTX crash. However, a blanket ban on these issues is a desperate move that will do more harm than good.

What we do need is progressive regulations and laws that incentivize better cryptocurrency projects to shine and undermine the bad actors of the cryptocurrency space. Having such regulations help the markets move in a more traditional manner and push our tech towards a more decentralized future.

IMF’s nine-point action plan has created a contentious environment. But it has also created more room for debate. And talking about the cryptocurrency space will help find a solution that moves it forward without undermining the laws.

Till then, we must keep a close eye on these regulatory developments. Stay tuned with insidebitcoins to keep up with all the regulatory news.