India's Crypto Regulation Delayed: What’s Really Going On?

India's long-anticipated discussion paper on cryptocurrency regulation remains unpublished, with the government’s attention focused elsewhere. Although many expected the policy direction by September, other pressing matters have shifted crypto regulation down the priority list. Here's a closer look at why India is delaying its crypto policy and what it means for the industry.

Why the Delay?

The Indian government was expected to release a discussion paper that would outline the future of cryptocurrency regulation after consultations with the central bank and market regulators. However, insiders now say there is no clear timeline for its release. The reason? The government is grappling with multiple urgent issues, pushing crypto regulation to the back burner.

Competing National Priorities

Several factors contribute to the delay in crypto regulation. India is busy preparing for the 2024 IMF and World Bank annual meetings, which will have significant global implications. The ongoing Russia-Ukraine war and escalating conflict in the Middle East are also commanding attention. Domestically, the Finance Ministry is preoccupied with budget preparations, especially with elections looming. Amid these challenges, regulating crypto has become a lower priority.

Crypto Not an Urgent Concern

Even though Indian exchange WazirX recently suffered a $234 million hack, the government doesn't view crypto regulation as urgent compared to two years ago. Although the sector remains largely unregulated, India has introduced stringent taxes on crypto transactions and mandated that crypto entities register with the Financial Intelligence Unit (FIU) to comply with anti-money laundering norms.

What’s Next for Crypto in India?

While India is likely to release its crypto discussion paper eventually, there’s no telling when that will happen. For now, the government’s focus is firmly on pressing international and domestic issues. Those eagerly awaiting clear crypto regulations in India will have to remain patient.

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