The United States and the International Monetary Fund (IMF) have lent their support to India's efforts to regulate cryptocurrencies.

Group of 20 (G20) finance ministers have been meeting in Bengaluru for the past two days, with Indian officials leading the discussion on how to address the challenges posed by cryptocurrencies like bitcoin.

India Calls on Global Crypto Regulations

Reuters reports that India has called for a coordinated effort to be made on a global scale to regulate cryptocurrencies. It recently hosted a seminar for member states of the G20 to discuss how to formulate a standard regulatory framework.

The seminar discussed a variety of subjects, including the need for a common taxonomy and a systematic classification of the crypto asset universe, the benefits and risks of crypto assets, macroeconomic policy issues that needed to be further evaluated, and financial stability issues and regulatory responses.

The Reserve Bank of India has argued that cryptocurrencies should be prohibited because they are comparable to Ponzi schemes and, therefore, should be outlawed.

Janet Yellen, U.S. Treasury Secretary, told Reuters at the G20 meeting that a solid regulatory framework for cryptocurrencies is critical, but the United States has not proposed an outright ban. Yellen stated, "We're working with other governments."

According to a report by Forbes in early February, the Biden administration has been accused of attempting to "quietly" ban bitcoin, Ethereum, and other cryptocurrencies in a move dubbed "Operation Choke Point 2.0." This refers to a 2013 initiative to cut off "undesirable" industries from banking services.

'Banning Crypto Should Be an Option'

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IMF Managing Director Kristalina Georgieva, who co-chaired a meeting with Indian Finance Minister Nirmala Sitharaman, stated that banning crypto should be an option. 

Reuters reports that the IMF has outlined a nine-point action plan for how countries should treat crypto assets, the first of which is a request that cryptocurrencies not be given legal tender status.

As a result of the failure of several crypto exchanges and assets over the past few years, authorities have prioritized the regulation of cryptocurrencies. The IMF has stressed that inaction is no longer tenable.

The government of Indian Prime Minister Narendra Modi has debated for years whether to draft a law to regulate or prohibit cryptocurrencies. However, there has been no final decision made.

Crackdown on Cryptocurrency

The push for regulation has recently gained momentum, with some governments, such as China, implementing restrictions on cryptocurrency trading and mining as early as 2021.

In contrast, some countries, such as El Salvador, have adopted bitcoin as legal tender despite International Monetary Fund warnings. The country is reportedly submerged in foreign debt as the value of the virtual coin plummeted, and China is now attempting to buy out the country's $21 billion in external bond debt.

Since cryptocurrencies operate in a decentralized and largely unregulated environment, regulating them can be difficult. Nonetheless, individuals and institutions' growing adoption of cryptocurrencies has compelled governments to address the risks associated with these assets.

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