India’s finance minister reiterated the risks that digital assets could have on an economy.
Speaking at an International Monetary Fund (IMF) seminar, Nirmala Sitharaman warned that money laundering and terrorist financing remain the two main threats.
The minister argued that crypto transactions have become huge and must be subject to a regulatory framework. “As long as non-governmental activity of crypto assets is through non-hosted wallets, regulation will be very difficult,” she said.
However, she admitted that technology can make cross-border payments more efficient using central bank currencies.
Ravi Menon, Chief Executive of the Monetary Authority of Singapore (MAS), said he sees the crypto asset economy as a token economy where anyone can tokenize assets.
As Singapore has emerged as a major hub for crypto businesses, the MAS warned of the risks associated with trading digital payment tokens (DPTs), adding that they are not suitable for the general public.
Supporting the need for proper regulation for crypto assets, Menon said, “I think we need to look at the underlying activity, nature and quality of the crypto asset. Determine the specific risks they pose and apply regulations to address those risks.
Singapore-based Virtual Asset Service Providers (VASPs) operating overseas or locally are now regulated under the Anti-Money Laundering (AML) and Anti-Terrorist Financing (CFT) guidelines.
Indian exchanges circumvent restrictions
Several cryptocurrency exchanges in India facilitate peer-to-peer transactions to circumvent restrictions on traditional payment systems.
Traditional banks have severed their ties with crypto platforms and Indian companies are facing new taxes on crypto transactions from early July.
Sitharaman justified the new crypto tax regime by saying, “We are trying to make sure that we keep track of it and also make sure that they will ultimately be compliant with anti-money laundering rules. And to ensure that these kinds of operations do not inadvertently end up financing terrorist activities. »
India is estimated to have 15-20 million crypto users. Sitharaman noted that any regulation using the technology will need to ensure it is not behind.
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