India Expected to Release Consultation Paper on Cryptocurrency Regulations in Coming Months, Report

The Indian government, through a panel headed by the Secretary of the Department of Economic Affairs (DEA), is expected to release a consultation paper on cryptocurrency regulations. The paper, scheduled for release between September and October 2024, will seek input from stakeholders to gather feedback on effective regulation. India is emphasizing the importance of international consensus in shaping its policy.

India to Release Consultation Paper on Cryptocurrency Regulations

A panel headed by the Secretary of the Department of Economic Affairs (DEA) in India is expected to release a consultation paper on cryptocurrency between September and October, CNBC-TV18 reported on Thursday, citing unnamed sources.

The consultation paper will gather feedback on how best to regulate crypto assets, reflecting the government’s commitment to addressing both global and domestic challenges posed by digital currencies. This move signifies India’s proactive steps in shaping its cryptocurrency landscape, following Finance Minister Nirmala Sitharaman’s statement in October 2023 that G20 nations have aligned on a unified regulatory approach. Sitharaman has said:

Given the understanding that globally now all of us are on the same page about how regulations can happen, country and their specific legislative arrangements will also have to be worked out.

Although India lacks a specific regulatory framework for cryptocurrency, the tax regime introduced in 2022 imposes a 30% flat tax on crypto profits and a 1% tax deducted at source (TDS) on transactions, which industry leaders claim stifles growth. Despite these concerns, the Indian finance minister’s 2024-25 Union Budget keeps the existing tax regulations unchanged. Industry leaders emphasize the need for ongoing dialogue with regulators to foster a more supportive environment for the Web3 sector.

The Reserve Bank of India (RBI)’s May 2024 bulletin warns retail investors that “the crypto ecosystem lacks accountability and stability and is marked by regulatory ambiguity.” The Indian central bank also cautioned that some cryptocurrency systems may be “prone to crisis without safeguards.” However, earlier this month, the Orissa High Court in India reaffirmed that cryptocurrency trading and transactions are neither banned nor deemed illegal in India. Recently, Binance, the world’s largest cryptocurrency exchange, said it has re-entered the Indian market after complying with local regulations.

Do you think India will release a consultation paper on crypto in the next few months? Let us know in the comments section below. #Write2Earn