Regulation
India to release crypto policy discussion paper by September 2024
Indian regulators plan to release a discussion paper on the country’s stance on cryptocurrencies by the end of 2024.
In a recent interviewEconomic Affairs Secretary Ajay Seth said the discussion paper will shed light on the government’s stance on cryptocurrencies. The paper will seek comments from relevant stakeholders in crafting a cryptocurrency policy in one of the world’s most populous countries.
“In India (cryptocurrencies) are regulated only from the AML and EFT point of view. Regulation starts and ends there, it cannot go beyond that, so should there be more jurisdiction? What should be the policy position? All that will come out of the discussion paper.”
Ajay Seth, Secretary, Economic Affairs
An inter-ministerial group of multiple regulators is drafting the discussion paper. The group is said to be considering a “broader cryptocurrency policy,” Seth says.
The discussion paper is expected to be published before September.
The group comprises the Reserve Bank of India, the country’s central bank, and the Securities and Exchange Board of India, the market regulator.
The RBI has historically opposed the authorization of cryptocurrencies in India, citing risks to the nation’s economic stability. Therefore, the central bank has proposed a total ban on cryptocurrencies instead of regulating them.
Meanwhile, India’s securities regulator has taken a more benign stance. In May 2024, SEBI said the nation should adopt a Multi-agency approach to cryptocurrency legislationThe suggestions, submitted to an advisory committee, outlined plans to delegate oversight to various agencies such as the Insurance Regulatory and Development Authority of India.
Furthermore, Seth pointed to an IMF-FSB position paper published in July 2023, which advised against an outright ban on digital currencies. Finance ministers and central bank governors (FMCBG) of the G20 nations adopted the proposal of the global regulator in October.
The IMF-FSB proposal came during India’s presidency at the G20 summit last year. Seth hinted that those frameworks could be taken into account while drafting the policy document.
Sumit Gupta, co-founder of Indian cryptocurrency exchange CoinDCX, praised the move, saying it was a “significant step” towards regulating the cryptocurrency industry.
“As a key stakeholder in this space, we urge the government to actively seek input from domestic companies. Engaging local companies will ensure that the regulatory framework is robust, inclusive and supports innovation,” Gupta told crypto.news.
India currently has no regulatory framework for cryptocurrencies, but has imposed a 30% tax on profits generated through cryptocurrencies, along with a 1% withholding tax. However, this has not stopped regulators from cracking down on the industry.
India’s Financial Intelligence Unit has compulsory license for crypto service providers operating in the country and, consequently, several offshore crypto exchanges they were blocked earlier this year.