September 13, 2023
By Tsering Namgyal
India is reportedly formulating a regulatory framework for crypto assets based on the synthesis report on crypto assets published by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) during the G20 summit in Delhi last week.
The new rules will likely bring crypto platforms in India under the purview of its central bank, the Reserve Bank of India, and might be granted status akin to authorized dealers (banks) in India.
The framework will likely be announced within the next five to six months, reported Coin Telegraph. India is currently regulating the crypto platforms based on tax and the latest move is seen by experts as a pivot towards a more comprehensive regulatory regime in line with those seen in the developed nations such as Singapore, Hong Kong and Japan.
Following the publication of the report, India has pretty much ruled out whether to ban cryptocurrencies in the country. Finance Minister Nirmala Sitharaman told reporters on the sidelines of the G20 summit: “I don’t want to get into the debate just now whether crypto will be regulated or banned. The G20 (member countries) will take a call on that.”
Sidharth Sogani, CEO of Crebaco, which has worked with government agencies and ministries, told Cointelegraph that the Indian government is working on a five-point crypto legislative framework.
- 1. Setting up advanced Know Your Customer (KYC) for crypto companies, which covers the Foreign Account Tax Compliance Act and existing Anti-Money Laundering standards.
- 2. Crypto platforms would be required to release proof-of-reserve audits on a real-time basis to regulators.
- 3. A uniform taxation policy across the nations.
- 4. Crypto exchanges could gain the same status as authorized dealers (similar to banks) under the guidelines of the Reserve Bank of India (RBI).
- 5. Key positions may be mandatory, such as Money Laundering Reporting Officer for crypto platforms.
Indian finance ministry officials believe that the IMF-FSB recommendations offer a “good framework” to decide how India wants to pursue the development of its own crypto framework. It seems that a consensus has also been achieved that banning cryptocurrency is no longer a good option and it would be a futile exercise when other countries are not banning it.
India doesn’t have any specific crypto regulations in place yet, though the country imposed a 30% tax on crypto gains in 2022. It also imposes a 1% tax deducted at source (TDS) on the transfer of crypto assets from July 01, 2022, if the transaction exceeds 50,000 (or 10,000 in some cases) in a similar financial year.
Any clarity on crypto regulations is good news for the country’s burgeoning digital assets industry.
About the author
Tsering Namgyal is the chief content officer of NFTMetta.com.
