India to Release Crypto Discussion Paper by September 2024
India is set to unveil a discussion paper on cryptocurrency regulation before September 2024, as announced by Economic Affairs Secretary Ajay Seth.
This initiative aims to gather inputs from relevant stakeholders on the proposed regulatory framework for the crypto industry, which is currently governed only by anti-money laundering (AML) and electronic funds transfer (EFT) laws.
Objectives and Focus Areas
Regulatory Scope: Evaluating whether the current regulatory scope should be expanded.
Policy Stance: Establishing a clear policy stance on cryptocurrency regulation.
Stakeholder Consultation: Engaging with stakeholders to gather their views and suggestions.
An inter-ministerial group, comprising members from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is developing this broader policy. Seth emphasized the importance of consulting stakeholders to ensure a comprehensive and inclusive regulatory framework.
Response to International Guidelines
India’s move to release the discussion paper aligns with the support of G20 countries for the International Monetary Fund (IMF) and Financial Stability Board (FSB) guidelines.
These guidelines, endorsed during India’s G20 presidency last year, advised against a hostile approach, such as an outright ban on crypto activities, due to the enforcement challenges such measures would entail.
Industry Reactions
Sumit Gupta, co-founder of CoinDCX, expressed optimism about the government’s initiative. He highlighted the importance of involving domestic businesses in the consultation process to ensure that the regulatory framework is robust, inclusive, and supportive of innovation in the rapidly evolving Web3 industry.
Taxation Concerns
Despite the forthcoming discussion paper, Indian crypto investors received no relief from the stringent tax rules in the 2024-2025 budget. The current tax regime imposes a 30% tax on cryptocurrency gains and a 1% Tax Deducted at Source (TDS) on crypto asset transfers. This has raised concerns among investors and industry professionals about its impact on the country’s crypto market.
Finance Minister Nirmala Sitharaman’s budget speech did not address these tax regulations, disappointing many in the crypto community who had hoped for more favorable tax policies.
Conclusion
India’s forthcoming discussion paper on cryptocurrency regulation represents a significant step towards a comprehensive and inclusive regulatory framework for the country’s rapidly evolving crypto industry.
By engaging with a wide range of stakeholders, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), the initiative aims to establish a clear policy stance and potentially expand the current regulatory scope.
This proactive approach aligns with international guidelines, such as those endorsed by the G20, which discourage outright bans on crypto activities due to enforcement challenges.
As India prepares to release its discussion paper by September 2024, the balance between fostering innovation and ensuring regulatory compliance will be crucial for the future of the country’s crypto market.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
