đđ„ Cryptocurrency regulation in India: Not for tomorrow! đ„đ
Minister of State for Finance Pankaj Chaudhary recently said that there is no immediate intention to regulate the cryptocurrency sector in India. The statement created a stir in the crypto community, especially after questions were raised by MP GM Harish Balayogi, who sought to clarify the governmentâs stance on crypto.
Chaudhary clarified that there is âno proposalâ to regulate the âsales and purchasesâ of cryptocurrencies, also known as virtual digital assets under the Indian constitution. In terms of monitoring, he added that the Financial Intelligence Unit (FIU) has the authority to designate virtual digital asset service providers as reporting entities under the Prevention of Money Laundering Act (PMLA), 2002. This is to monitor illicit activities such as money laundering and terrorist financing.
Despite the lack of a strong regulatory framework, law enforcement agencies, including regulators like the Reserve Bank of India, are ready to investigate and take action against illegal activities as per existing laws. Recently, the Directorate General of Intelligence (DGIT) of GST asked Binance to pay $86 million in taxes owed.
On government research on cryptocurrencies, Chaudhary said the government does not collect data on the unregulated sector. He also mentioned the crypto asset roadmap adopted by G20 member countries under Indiaâs presidency last year. The roadmap stems from a joint IMF-FSB position paper that makes several recommendations on how member nations should approach crypto regulations.
Currently, India is assessing country-specific risks and benefits in collaboration with global âstandard-setting bodiesâ before taking any action. Chaudhary did not mention the upcoming discussion paper that is expected to inform the governmentâs position on cryptocurrencies. Ajay Seth, the economic affairs secretary, announced that an inter-ministerial group is working on a âbroader policy for cryptocurrenciesâ as per the IMF-FSB guidelines, with a release expected before September 2024.
Meanwhile, India has implemented a licensing regime by the FIU after blocking several foreign crypto exchanges, stipulating that residents must declare their crypto holdings and pay a 30% tax on capital gains, according to a tax law passed in 2022. The country is also actively pursuing its central bank digital currency, the e-rupee, which reached 1 million retail transactions by the end of June. Companies like AmazonPay and GooglePay have expressed interest in enabling e-rupee transactions on their respective platforms.
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