Regulation
Cryptocurrency Policy Discussion Paper by September
India is all set to prepare its cryptocurrency policy! India is set to release a major discussion paper on its cryptocurrency policy by September. The paper will outline the country’s stance on digital assets and solicit stakeholder feedback to inform future regulatory actions. There are no laws so far and crypto enthusiasts are expecting more flexible rules on cryptocurrencies. Taking lessons from Hong Kong, Dubai, and Singapore on regulations, will India be able to tap into this multi-billion dollar industry?
Role of the Interministerial Group
According to relationshipEconomic Affairs Secretary Ajay Seth said the discussion paper will present key issues surrounding cryptocurrencies and invite stakeholders to provide their input. This approach is intended to foster broad consensus rather than immediately implement comprehensive legislation.
An inter-ministerial group is leading the policy formulation, comprising members from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). The RBI has expressed reservations about legitimizing cryptocurrencies due to concerns about risks to macroeconomic stability. In contrast, SEBI is open to regulating digital assets and believes that oversight should be handled by multiple authorities.
Key points
The key point here is that last year in September, Mr. Seth said that India would decide its policy stance on cryptocurrencies in the “coming months.” It has been almost 10 months since then. It is important to note that Seth’s latest interview does not suggest a commitment to regulating cryptocurrencies through comprehensive legislation, but rather a consensus-based position among stakeholders on the issue.
This means that if the RBI and other opposing stakeholders prevail in their efforts to build consensus, India’s policy stance on cryptocurrencies would remain unchanged and no bill would enter parliament.
Current regulatory scenario
Currently, India does not have a comprehensive cryptocurrency regulation. The existing framework focuses on anti-money laundering (AML) and electronic funds transfer (EFT) compliance. Crypto entities are required to register with the Financial Intelligence Unit (FIU-IND) to adhere to international standards set by bodies such as the Financial Action Task Force (FATF).
And now?
The discussion paper will address the question of whether additional regulatory measures are needed beyond the current AML and EFT requirements. Seth mentioned that India is considering global perspectives on cryptocurrency regulation, especially in light of its presidency of the Group of 20 (G20), which has emphasized consensus-based global cryptocurrency rules.
This move is expected to provide clearer guidelines for the cryptocurrency sector in India and reflect a more informed and balanced approach to regulating digital assets.