Besides, cyber threat is another area which needs global cooperation, she said.
“India’s Presidency has put on table in the G20 issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets,” Sitharaman said while addressing the Global Fintech Fest.
She said active discussions are happening on this. Even the International Monetary Fund (IMF) and Financial Stability Board (FSB) have submitted synthesis paper on crypto assets.
“Crypto (is a) threat as well as an opportunity. But crypto is also an example to say how unless global cooperation works out well, you are not going to be able to have a responsible financial ecosystem which can regulate it as well,” she said.
In December last year, the Reserve Bank of India (RBI) Governor Shaktikanta Das warned that private cryptocurrencies, if allowed to grow, would lead to the ‘next financial crisis’ and reiterated his stance to prohibit them.
This comes in the wake government plans to move ahead with its ongoing discussions for formulating an overarching regulatory and taxation framework for crypto assets, a move which had been stalled in wait for a global framework. In last year’s Budget, even though the government brought in a tax for cryptocurrencies, it did not proceed ahead with framing any futher regulations for it despite the Reserve Bank of India having proposed a ban on it. In July last year, underscoring that the RBI has expressed concerns over cryptocurrencies and sought a ban on them from the government, Sitharaman said in Parliament that “international collaboration” would be needed for any effective regulation or ban on cryptocurrency as the digital currency is borderless in nature.
Talking about global cooperation, Sitharaman said Tuesday in an interconnected world, financial technology transcends borders, therefore making cross border partnerships is absolutely crucial. Collaborative ventures open up access to a vast and diverse customer base accelerating market participation and penetration.
She said there are various threats including cyber and physical, in building a responsible financial global system. “As much as you build firewalls, there are more and more newer ways in which (cyber) attacks are being made,” Sitharaman said.
The finance minister said the global annual cross border payments currently stands at $20 trillion, incurring $120 billion in transaction cost. India is the largest remittance receiver with about $100 billion worth of remittance, taking 2022 as the base.
“The high remittances are a motivating factor in our pursuit of enhancing cross border payment arrangements. Enhancing cross border payments has been India’s priority,” she said, adding that this issue has been discussed in the G20.
The finance minister said fintech companies need to invest heavily in robust security measures, utilising advanced encryption and other measures to protect user data and financial transactions. “A secured system is what will build trust and therefore that is a must for the financial ecosystem to truly flourish. India can lead in making the financial ecosystem inclusive, resilient and sustainable,” Sitharaman said.
Given the country’s rich and successful experience in digital payments, Sitharaman urged the Indian fintech industry to take a strong lead in cross-border payment systems.
The finance minister further said the recent income tax return (ITR) data, released in August, showed that the formalisation of the Indian economy is now really wide.
“Each tax slabs has seen a minimum three-fold increase in tax filing. Some even achieving a nearly four-fold surge. We are in Mumbai, so, contextually I like to highlight that Maharashtra continues to be the leader,” she said.
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Other states are moving up with respect to ITR filings. In places like North-East, Chhattisgarh, Jammu and Kashmir, the new ITR filings have gone up to two digits, growing by double digit growth, Sitharaman said.
She said in a span of about four years, the number of demat accounts has increased by 2.5 times from 4.1 crore in 2019-20 to 10 crore in 2022-23.
A record number of mutual fund systematic investment plans (SIPs) are being registered which helps in generating long-term wealth, she said.
