Leading international organizations, including the UNCTAD and the Financial Stability Board of the World Bank, have recently published policy notes on crypto-assets, also known as virtual digital assets (VDAs). The Bank for International Settlements (BIS), a crucial player in global finance, highlighted the relationship between VDAs and monetary and financial stability. BIS presented three policy options: an outright ban, containment, and regulation. While acknowledging the potential benefits of bans and containment, BIS cautioned against overly restrictive approaches that could push activities into unregulated sectors. India, influenced by G20 discussions, is considering its stance on VDAs; whiles the US, EU, Dubai, and Japan have adopted various regulatory approaches.
Facts/Terms for UPSC Prelims
- Virtual Digital Assets (VDAs): Crypto-assets, also known as virtual digital assets, are digital or virtual currencies like Bitcoin and Ethereum.
- Bank for International Settlements (BIS): BIS serves as the banker for central banks and plays a vital role in shaping global financial policy.
- G20: The Group of Twenty is an international forum for governments and central bank governors from 19 countries and the European Union.
- SEC vs. Howey: A legal test used by the U.S. Securities and Exchange Commission (SEC) to determine whether an asset qualifies as a security under U.S. law.
- Markets in Crypto Assets (MiCA): EU regulation that prescribes registration requirements for Virtual Asset Service Providers (VASPs) operating in the European Union.
- Dubai Virtual Asset Regulation Authority (VARA): Regulatory authority in Dubai overseeing virtual asset-related activities and licensing for crypto exchanges.
- Gox: A major cryptocurrency exchange that collapsed in 2014, leading to regulatory changes in Japan regarding VDAs.
