"When Lambo"? "When Moon"? A Global Crypto Framework Is Round the Corner!1
Udaibir Das*
The global community is searching for a unified policy approach toward crypto assets, and India, as the
G20 President, is emerging as a leader in such a framework.
The G20 Finance Ministers and Central Bank Governors have tasked the International Monetary Fund
(IMF) and the Financial Stability Board (FSB) to develop a joint "synthesis" paper on the crypto asset
ecosystem within seven months. India has rightly insisted that any global policy approach must go beyond
regulation and supervision and cover the macroeconomic aspects of crypto assets. A new international
financial standard is thus attainable by the end of India's G20 presidency.
India's concern around the global regulation of the 'cryptoverse,' which includes all economically relevant
crypto-related offerings, is sensible, and its urgency in this matter is justified. In just a few years, the
'cryptoverse' has grown from a few digital assets to numerous cryptocurrencies and assets, and more
technology-based experiments are underway.
The international discourse around the growth of the 'cryptoverse' is divided. Proponents argue that crypto
can be a tool to promote social equity and sustainability. Others dismiss this notion as a bold claim until
more is understood and regulations get established. In its supervisory guidance letter on crypto asset
activities issued in late 2022, the Federal Reserve said to the banks, "Don't jump in and plan to figure out
risk management later."
’Moon’ and ‘Lambo’ have become part of the crypto parlance. A digital asset is said to be going to the “Moon” when the asset
holder believes that dramatic price increases are likely. The phrase “Lambo” is a way to ask an asset holder will sell and become
rich (Lambo is a take on the expensive, super luxurious car Lamborghini). The usage came about around 2017 —when values
spiked to create a milestone in the cryptocurrency’s long story.
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Nevertheless, this division has yet to deter the growth of the 'cryptoverse.' Some estimates put the total
market capitalization at about $3 trillion — a small part of the global financial system but proliferating.
The evolving 'cryptoverse' shows sizable operational disparity across markets. Over 6,000 tokens are
moving around, and new crypto products are launched daily. The trading volumes are comparable with
some traditional asset classes. Concerning this, the liquidity and pricing profile is ominously straddling
between volatility and illiquidity.
Indeed, to address this, institutions and sovereigns have tried to regulate parts of the 'cryptoverse.' For
example, the Basel, Madrid, and Paris-based financial standard-setting bodies have been attempting to
fathom crypto assets' supervisory risk dimensions. Similarly, the IMF has been pointing out risks to capital
flow management and has very recently discussed what could be some elements of effective policies for
crypto assets. Some have heeded this warning and implemented comprehensive regulations (Japan and
Switzerland), while others are in the preliminary stages (E.U., UAE, U.K, and the USA). However, these
are independent or ad hoc frameworks rather than one guided by a unified global framework.
Why is a global approach the way to go?
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First is the fact that the 'cryptoverse' is without borders. Each new crypto tool scales up through a
different channel and crosses into new domains and territories. Such operating mechanics limit the
effectiveness of national approaches. Uncoordinated growth will only alter the composition and
mode of retail capital flows, distort external sector accounts, put financial stability at risk, and
impair consumer confidence.

Second is the 'cryptoagion risk' (contagion and cross-border spillovers). The cryptoagion risk is
high without universally agreed technological and legal specifications and prudential definitions of
exposures and counterparties. Capital flow and macroprudential measures or foreign exchange
management tools are not designed for the 'cryptoverse.’ They will be blunt instruments to control
aby dislocation in global financial flows via the 'cryptoverse.' Some G20 members also face a
monetary management risk in the case of currency substitution through crypto assets (akin to
dollarization).

Third is the need for consistent and uniform data and the ironing out of accounting, collateral, and
valuation problems across markets. The data gap problem comes atop data gaps and consistency
issues in the regulated sector. Should this uniformity be based on the principle "same activity,
same risk, same regulation?" The jury is out, but what is clear is that the market overseers and the
consumer need a better quantitative handle on 'cryptoverse' activities.
With these three concerns in mind, what will it take for a global approach to succeed, and how can the G20
play a role in this?
Undoubtedly international consensus is inherently complex, especially on issues requiring timely and
consistent implementation. As the G20 pushes the agenda, it should keep the ‘C’s in view:
1. Comprehensive. The new guidance must be analytically and conceptually strong. It must cover
the legal, tax, and prudential aspects as well as technological, accounting, and judicial
prerequisites — a piecemeal response (such as just on regulation) will spur crypto actors to walk
through the loopholes.
2. Compliance. The post-G20 standard must be enforceable and put to work early. To signal that
the G20 leaders are fully committed, a program like the World Bank-IMF Financial System
Assessment Program or the Basel Committee's novel Regulatory Consistency Assessment
Program (with the involvement of FATF) should become global mechanisms for the observance
of international crypto norms.
3. Consistency. Communication and 'crypto literacy' are vital to explain and shape consumer
behavior, especially in advancing and lesser-developed economic systems. A streamlined set of
concepts and definitions are essential. It will facilitate implementation, communication with
crypto users, and disclosure.
Suppose India and the G20 are successful by the end of the year and a uniform and comprehensive
approach comes about, it may reassure the users of cross-border financial services that the next global
financial crisis need not originate out of the 'cryptoverse.' Meanwhile, the widespread use of crypto
products and services must be managed early and globally coordinated before a systemic risk arises. A
well-designed, adequately communicated and effectively implemented G20 global framework is a step in
the right direction.
Udaibir Das is formerly of the IMF. He is presently a Distinguished Non-Resident Fellow ORF America (USA), Senior NonResident Advisor Bank of England (UK), Senior Non-Resident National Council of Applied Economic Research (India), and
Visiting Faculty Kautilya School of Public Policy (India)