No immediate plans for crypto regulations in India, says Minister of State

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As an analyst with a background in global financial markets and regulatory frameworks, I find the current state of cryptocurrency regulation in India quite intriguing. The recent statements from Minister of State for Finance Pankaj Chaudhary indicate that while India is not looking to regulate cryptocurrencies imminently, it is certainly keeping a watchful eye on this sector.

According to India’s Minister of State for Finance, Pankaj Chaudhary, there are currently no plans to control or regulate the cryptocurrency industry in the near future.

Chaudhary provided his thoughts after being questioned about the government’s position on cryptocurrencies by MP Harish Balayogi, who was seeking clarification on the matter.

Directly, the Member of Parliament asked for details on the government’s exploration or actions related to the cryptocurrency industry, and whether they plan to enact new regulations in this area in the near future.

As a researcher delving into the realm of cryptocurrencies, I can confirm that in my recent correspondence on August 5th, Chaudhary indicated no forthcoming regulatory measures specifically targeting the buying and selling activities associated with these digital assets, as per the Indian constitution’s classification of them as virtual digital assets.

In terms of setting up a system to oversee the industry, Chaudhary stated that the Financial Intelligence Unit has been given the authority to identify Virtual Digital Asset Service Providers as entities required to report.

According to the FIU, these entities are required to follow the regulations set by the Prevention of Money Laundering Act (PMLA) of 2002. This action enables the regulatory body to monitor illegal activities like money laundering and terrorist funding.

Additionally, the minister noted that although a comprehensive legal structure is absent, regulatory bodies such as the Reserve Bank of India, who play a role in law enforcement, have the necessary tools to tackle illegal activities using the current laws. For instance, an agency like the Directorate General of GST Intelligence has recently issued a notice to Binance, demanding payment of approximately $86 million in unpaid taxes.

Concerning your question about the government’s research into their work on cryptocurrencies, Chaudhary stated that the government does not gather any information in this “unregulated” field because it is not subject to regulation.

Furthermore, the minister of state emphasized the G20’s strategy for managing cryptocurrencies, which was adopted by its member countries under India’s leadership last year. This strategy was derived from a unified report produced by the International Monetary Fund (IMF) and Financial Stability Board (FSB), offering suggestions on how nations should regulate cryptocurrencies.

Based on Chaudhary’s statement, each G20 country, including India, is assessing the unique advantages and potential drawbacks of cryptocurrencies. After this evaluation, they plan to collaborate with international regulatory organizations in order to decide on any appropriate actions.

Additionally, Chaudhary omitted any reference to the forthcoming policy document expected to clarify the government’s position regarding cryptocurrencies.

In the recent past, Ajay Seth, Economic Affairs Secretary, revealed that a collective team involving various regulatory bodies is currently developing a comprehensive strategy for digital currencies, in line with the recommendations provided by the IMF-FSB. The document is projected to be made public before September 2024.

At present, following the blocking of certain foreign cryptocurrency exchanges, India’s Financial Intelligence Unit (FIU) has enforced a system where locals are mandated to disclose their crypto assets and pay a 30% tax on any capital gains, as per a recently passed tax law in 2022.

As a researcher, I’m excited to share that our nation is proactively advancing its digital currency, the e-rupee, which recently surpassed 1 million retail transactions in late June. Initially, this project was only open to local banks, but as we move into the pilot phase, payment firms are now welcome to apply. Big players like AmazonPay and GooglePay have shown interest in facilitating e-rupee transactions on their platforms. This could potentially expand the reach and accessibility of our digital currency significantly.

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2024-08-06 15:22