Regulation
Crypto Policy Discussion Paper to be Released Before September: DEA Secretary Ajay Seth
India is set to release a discussion paper outlining its cryptocurrency policy stance before September, according to Economic Affairs Secretary Ajay Seth. This initiative aims to gather feedback from relevant stakeholders on the proposed cryptocurrency regulatory framework in the country. The upcoming discussion paper will seek to provide input on the scope of cryptocurrency regulations in India, addressing current limitations.
Currently, cryptocurrencies in India are regulated primarily from an anti-money laundering (AML) and counter-terrorism (CTF) perspective, Seth noted in an interview with Moneycontrol. “Regulation starts and ends there, it cannot go beyond that, so should the purview be more? What should be the policy stance? All that will come out in the discussion paper.”
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In March 2023, India expanded its AML and CTF standards to include crypto assets and intermediaries. An inter-ministerial group, which includes the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), is currently developing a broader crypto policy. “A broader crypto policy is currently being considered by an inter-ministerial group. We expect to release the discussion paper before September,” Seth added.
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The decision to draft a discussion paper follows the approval of guidelines by G20 member countries during India’s presidency last year. These guidelines, formulated by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), advised against a blanket ban on cryptocurrency activities, deeming such a move impractical.
Seth stressed the importance of the G20 agreed roadmap, which provides a framework for assessing the risks and potential use cases of cryptocurrencies. This framework is likely to influence the development of India’s discussion paper.
What will the document bring to the table?
The paper aims to open a dialogue with stakeholders, presenting issues and gathering their perspectives. This approach is in line with a Reuters report from earlier this year, which indicated that Sebi had suggested more regulators oversee cryptocurrency trading, signaling the willingness of some authorities to allow private virtual assets. In contrast, the RBI has expressed concerns about the macroeconomic risks posed by private digital currencies.
“Seeking input from various stakeholders can potentially create a balanced regulatory framework. Currently, India’s focus on cryptocurrencies revolves around AML and CTF measures, but a broader mandate is definitely needed to expand the scope to include consumer protection, market integrity, and innovation that can ensure responsible growth,” Mudrex CEO Edul Patel said. ABP Live. “The inclusion of RBI and SEBI in the inter-ministerial group signals a collaborative effort, balancing innovation and risk mitigation. We look forward to the publication of the document in September.”
India’s journey towards cryptocurrency regulation has seen significant developments, including the central bank’s 2018 ban on financial institutions dealing with cryptocurrency users or exchanges, which was struck down by the Supreme Court in 2020. Despite the government’s efforts to introduce a bill proposing a ban on private cryptocurrencies in 2021, it has yet to be enacted.
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