Indian regulators plan to release a discussion paper on the country’s cryptocurrency stance by the end of 2024. Ajay Seth, Secretary of Economic Affairs, stated that the paper will outline the government’s position on crypto and seek feedback from stakeholders to shape the policy for one of the world’s largest populations.
Ajay Seth, Secretary of Economic Affairs, stated that India’s current cryptocurrency regulations focus solely on anti-money laundering (AML) and combating the financing of terrorism (CFT). The upcoming discussion paper will address whether the scope of regulation should extend beyond these areas and seek feedback on the policy stance.
An inter-ministerial group, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is drafting the paper. The RBI has traditionally opposed cryptocurrencies, suggesting a ban due to economic stability concerns, while SEBI advocates for a multi-agency regulatory approach.
The discussion paper is expected by September and will consider insights from the IMF-FSB synthesis paper, which advises against outright bans and was endorsed by G20 finance ministers and central bank governors.
The IMF-FSB proposal, introduced during India’s G20 presidency last year, may influence the upcoming policy paper on cryptocurrencies.
Sumit Gupta, co-founder of CoinDCX, praised the move as a “significant step” towards proper regulation. He urged the government to consult domestic businesses to create a robust and innovation-friendly framework.
Currently, India lacks a comprehensive crypto regulatory framework but imposes a 30% tax on crypto profits and a 1% tax deducted at source. Additionally, India’s Financial Intelligence Unit requires licensing for crypto service providers, leading to the blockage of several offshore exchanges earlier this year.
