Time is running out for India to shape its crypto destiny.
India’s cryptocurrency sector could be on the brink of a major transformation as the Department of Economic Affairs (DEA) gears up to unveil a pivotal consultation paper on cryptocurrency legislation.
This much-anticipated document, expected in September or October, will seek input from a broad array of stakeholders, with the government taking a proactive role in shaping the future of digital currencies in the country.
This consultation paper, led by a panel chaired by the DEA Secretary, marks a crucial move in India’s ongoing quest to strike a balance between fostering innovation and ensuring regulatory oversight in its rapidly growing crypto sector.
The timing couldn’t be more significant, as global attention on cryptocurrencies intensifies, particularly following the G20’s unified stance on regulation. As per the latest crypto news, it was emphasized by Indian Finance Minister Nirmala Sitharaman during a G20 meeting in October 2023.
India has already adopted a cautious stance toward crypto regulation, most notably through the introduction of a stringent tax regime. In April 2022, the government imposed a 30% tax on unrealized crypto gains and a 1% tax deducted at source, signaling its first major effort to exert control over the volatile crypto market.
Yet, despite these measures, the government has stopped short of regulating the actual buying and selling of cryptocurrencies, focusing instead on combating money laundering and terrorism financing linked to crypto.
The upcoming paper from the DEA is anticipated to tackle a wide range of regulatory concerns, including those raised by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).
Back in May, SEBI suggested a multi-regulatory approach, where various financial authorities would oversee different aspects of cryptocurrency trading. This approach highlights the intricate challenge of regulating a technology that transcends traditional financial boundaries and presents unique regulatory hurdles.
