G20 crypto roadmap

THE adoption of the crypto roadmap by the finance ministers and central bank governors of the G20 nations to deal with the challenges posed by crypto assets is a step in the right direction. The International Monetary Fund and the Financial Stability Board have recommended that while crypto assets should not become legal tender, they should also not be banned as prohibition is a costly exercise and difficult to enforce. The plan to reach out to other nations for regulatory support is also timely in view of the frauds detected in the crypto world, which is not confined to geographical borders.

A major scam has just been unearthed by the Himachal Pradesh Police with the arrest of two kingpins belonging to the state and their accomplice, a former HP cop, from Punjab. While investigations into the case are underway, the scam is believed to be worth Rs 400 crore and thousands of people from the state and beyond have been swindled out of their money. Their modus operandi was to lure people to invest in the ‘Korvio Coin’ cryptocurrency with the promise of attractive returns, like in a Ponzi scheme. The multilevel chain marketing structure enabled the cheats to rip off gullible customers by paying handsome returns to the initial few investors and then pulling the rug from under their feet.

Framing regulatory procedures for this form of financial dealing, as also for the digital currency, is vital. The advocacy of global coordination and information-sharing on crypto assets and ensuring compliance with FATF (Financial Action Task Force) standards on crypto assets will help curb scams. Lakhs of investors worldwide are still reeling under the multi-billion-dollar impact of last year’s sudden collapse of FTX, one of the world’s largest cryptocurrency exchanges. Remedial steps are urgently needed.