A panel led by the Secretary of the Department of Economic Affairs (DEA) is preparing to release a consultation paper on crypto and digital currencies regulation between September and October 2024. This move signals the Indian government’s increasing involvement in changing the future of cryptocurrencies.
The paper will invite feedback from stakeholders and industry experts, showcasing the government’s commitment to carefully crafting a regulatory framework that addresses the rapidly evolving cryptocurrency sector, CNBC reported.Â
G20 Nations Uniformed Approach Towards Cryptocurrency
During a speech in October 2023, Finance Minister Nirmala Sitharaman stressed that the G20 countries had embraced a common strategy for regulating cryptocurrency. She emphasised that even though there is now worldwide agreement on cryptocurrency regulation, each nation will still need to create unique legal policies that are appropriate for their unique situation.
According to Sitharaman, “We are all on the same page about how regulations can happen,” and the international effort would be combined with regional regulatory initiatives within each nation. On the 2021 Budget, the FM levied a 30% tax on cryptocurrency capital gains and a 1% TDS deduction on all transactions.
An important step in fine-tuning India’s position on cryptocurrency legislation will be the forthcoming consultation document. Stakeholders will be able to voice their opinions about the management of cryptocurrency assets. The goal is to achieve a balance between protecting economic security and stability and promoting innovation in digital banking.
Do ETFs Have a Future In India?
Similar opinions were expressed in September 2023 by Ajay Seth, the Secretary of the DEA, who said that before India implements any new policies, it will carefully consider the proposals based on international agreement.
Seth also agreed that rules should be designed to account for the increased dangers associated with cryptocurrencies, particularly for developing nations. Leaders outlined the key regulatory elements, determined accountable bodies, and talked about an implementation schedule during G20 talks. This has also led to people wondering whether crypto ETFs too have a future in India.
India Shows Strictness Towards Crypto Platforms
India’s regulatory environment is already beginning to tighten. Nine offshore cryptocurrency platforms, including Binance, the biggest cryptocurrency exchange globally, were recently prohibited by the nation for breaking the Prevention of Money Laundering Act (PMLA) of 2002.
In December 2023, Binance re-established its presence in India by registering with the Financial Intelligence Unit, indicating that despite regulatory obstacles, foreign businesses are still interested in the Indian market.
The prospect of developing its digital currency issued by the central bank has also been investigated by India (CBDC). The Lok Sabha was presented with the Cryptocurrency and Regulation of Official Digital Currency Bill by the government in 2021. The purpose of this bill is to create a legal framework that would allow the Reserve Bank of India (RBI) to issue digital currency.
Like many other nations, India is considering the advantages and disadvantages of adopting cryptocurrencies. Proponents of cryptocurrency contend that it can completely transform financial activities, but regulators are wary, pointing out that strict regulations are necessary to avoid abuse. An important first step in India’s quest to strike a balance between innovation and regulation will be the consultation document.