The Indian government is gearing up to release a discussion paper outlining its policy direction on digital assets before September.
In an interview with Indian news outlet Moneycontrol, on 25 July 2024, Economic Affairs Secretary Ajay Seth said the country will seek input from relevant stakeholders on the ideas outlined in the paper.
“The policy stance is how does one consult relevant stakeholders, so it is to come out in the open and say here is a discussion paper these are the issues and then stakeholders will give their views,” explained Seth.
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Inter-Ministerial Group Looks Into Wider Policy For Crypto
Seth noted that at the helm of this regulatory deliberation is an inter-ministerial group, comprising key institutions such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
The inter-ministerial group “is looking into a wider policy for cryptocurrencies,” he said. “We expect to come out with the discussion paper before September.”
The RBI has historically expressed reservations about legitimizing cryptocurrencies, citing concerns about potential macroeconomic stability risks. However, SEBI has displayed a more receptive stance towards regulatory oversight for digital assets.
India’s regulatory landscape for cryptocurrencies currently lacks a comprehensive legislative framework but enforces stringent taxation measures on the sector.
Recent mandates necessitating registration with the Financial Intelligence Unit (FIU-IND) underscore a shift towards aligning with global anti-money laundering and counter-terrorism financing standards prescribed by organizations like the Financial Action Task Force (FATF).
“In India it (cryptocurrencies) is being regulated from the perspective of AML and EFT (Electronic Funds Transfer) alone. Regulation starts and ends there, it cannot be beyond that, so should the remit be more? What should be the policy stance? All that will come out in the discussion paper,” Seth said.
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India Maintains Controversial Tax Rules
As reported, Finance Minister Nirmala Sitharaman has upheld the controversial crypto tax regulations during the announcement of the fiscal year 2024-2025 budget.
Despite extensive lobbying from the cryptocurrency industry, which presented substantial evidence to advocate for a reduction in the tax-deducted-at-source (TDS) policy from 1% to 0.01%, the existing rules remain unchanged.
The cryptocurrency sector had also requested the government to introduce progressive taxes on gains instead of the existing flat 30% rate and to allow losses to offset gains.
India’s stance on cryptocurrencies has been somewhat ambiguous.
The imposition of strict crypto taxes in 2022 and the crypto market downturn led Indian traders to switch to international exchanges, negatively impacting the local crypto industry.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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