26 February 2024

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Finance Minister Addresses Cryptocurrency and Global Collaboration

Finance Minister Nirmala Sitharaman stated on Tuesday that a global framework and collaboration are crucial to fending off challenges coming from sectors like cryptocurrency. “Despite the fact that firewalls are built, novel attack methods are being developed on a constant basis. Cryptocurrency “is both a threat and an opportunity,” Sitharaman said at the Global Fintech Fest in Mumbai.

In India, the topic of cryptocurrency has long been contentious. The governor of the RBI, Shaktikanta Das, has often expressed his worries about the digital tokens, claiming that they pose risks to the stability of the financial system. In March, the finance ministry issued a notification that the Prevention of Money Laundering Act (PMLA) would apply to the exchange, transfer, storage, or administration of cryptocurrencies.

“India’s Presidency has put issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets on the table, in the G20,” Sitharaman said. There are lively talks going on. The Financial Stability Board (FSB), the International Monetary Fund (IMF), and the Organisation for Economic Co-operation and Development (OECD) have all produced insightful papers that are being discussed on numerous topics.

Global Collaboration and Security Measures in Cryptocurrency

She said that the IMF and FSB have published their synthesis paper on cryptocurrencies and added that international cooperation is necessary to create a responsible financial environment. Talking about multiple risks, including physical border threats, cyber threats, and crypto threats, is necessary, according to her. She continued by saying that fintech businesses should make significant investments in strong security, including cutting-edge encryption and other safeguards, to secure customer data and financial activities.

“Trust can only be established through a secured system, thus in order for the financial ecosystem to thrive, it is essential. She said that international collaboration is essential to making this feasible and that India can take the lead in ensuring that the financial ecosystem is inclusive, robust, and sustainable.

In an interconnected world where financial technology crosses boundaries, Sitharaman claimed that establishing cross-border relationships is extremely essential. She said that joint ventures might expand the size and diversity of the client base as well as increase market involvement and penetration.

She said that $120 billion in processing expenses are associated with an estimated $20 trillion in yearly worldwide cross-border payments. According to her, India would receive remittances of around $100 billion in 2022, making it the highest recipient country.

“The high remittances are a driving force behind our efforts to improve cross-border payment arrangements. India has prioritised improving cross-border payments, and the G20 is where we are talking about it, the official added.

Secure Fintech and Crypto Management

She challenged the fintech sector to lead in cross-border payment systems in light of India’s good track record in digital payments, citing the enormity of the Indian market.

Income tax returns (ITR) statistics, which were made public in August, demonstrated the growing formalisation of the Indian economy, according to Sitharaman.

“The number of tax returns filed has increased by at least three times for each tax bracket, I mean tax slab. Some even saw a roughly fourfold increase. Since we are in Mumbai, it makes sense for me to emphasise that Maharashtra is still in the lead, she said, adding that other states are catching up in terms of ITR submissions. She said that from 41 million in 2019–20 to 100 million in 2022–2023 there were 2.5 times as many demat accounts.

“A record number of mutual fund systematic investment plans (SIPs), which aid in developing long-term wealth, are being registered. Assets under administration of the Indian mutual fund business have grown significantly over the previous ten years, she added, with a monthly flow via the route hitting an all-time high of 15,245 crore in July 2023.