India Joins Calls for Global Action on Cryptos at Davos

DAVOS 2022 got underway on Monday, after having been postponed from December due to COVID-19. As a result of COVID-19, this year’s event is virtual and will end on 21^st January. World leaders delivering special addresses include the heads of states of Australia, China, Germany, India, Indonesia, Israel, Japan, and Nigeria. President of the EU Commission, Ursula von der Leyen and U.S Secretary of the Treasury Janet Yellen are also scheduled to speak.

United Call for Global Regulatory Oversight of Cryptos

For the crypto markets, the global presence at DAVOS 2022 provides world leaders an ideal platform to discuss cryptos and the regulatory road ahead.

Late last year, the Bank of England raised concerns over the risk that cryptos pose to UK financial stability. The UK’s central bank also talked of the need for a global regulatory framework for cryptos. Earlier this month, the IMF joined the Bank of England, raising concerns over the interconnectedness of cryptos and the U.S equity markets. Aligned with the UK’s central bank, the IMF also called for a global regulatory framework.

In recent months, there has been a marked increase regulatory chatter and activity. This month, news hit the wires of India’s central bank creating a new FINTECH division to step up its oversight of cryptos. In addition, however, the government is also looking to monitor the NFT market and new token launches. The move followed news of the government searching a number of crypto exchanges on the suspicion of tax evasion.

Indian Prime Minister Modi Joins Call for Action

Speaking on day 1 of DAVOS, Indian Prime Minister Modi reportedly called for “global cooperation and a common approach towards addressing emerging challenges posed by cryptocurrencies”.

With the Indian government cracking down on cryptos, the presence of other key world leaders could test crypto market sentiment. China’s Premier Xi Jining would certainly be aligned with a global crackdown.

Interestingly, the DAVOS agenda has climate action failure, extreme weather, human environmental damage, and natural resources crisis listed amongst the top 10 global risks over the next 10-years. Governments could argue that cryptos and crypto mining contribute to all of these and possible more of the top 10 risks.

Later this week, a U.S Congress subcommittee hearing is taking place to look at cryptocurrencies and the environment. Last summer, China had banned Bitcoin (BTC) mining as part of its goal of becoming carbon neutral by 2060.

Bitcoin (BTC) Price Action

It was a bearish day for the crypto market on Monday. Bitcoin fell by 2.03% to end the day at $42,224. With the U.S equity markets closed on Monday, persistent regulatory chatter likely contributed to the decline.

Year-to-date, Bitcoin was down by 8.60% to Monday’s close. More significantly, however, Bitcoin was down by 39% from November’s ATH $68,979.

With the U.S markets reopening today, we can expect the U.S equity markets to have some influence on the crypto majors. Chatter from Davos, however, and regulatory activity ahead of Thursday’s subcommittee hearing will also need considering.

At the time of writing, Bitcoin was up by 0.17% to $42,298. A move back through $43,500 levels would bring last week’s high $44,443 into play. A fall back to sub-$41,500 levels, however could bring sub-$40,000 back into play.