Indian finance ministry officials and government are discussing a framework for cryptocurrency with various stakeholders such as the International Monetary Fund (IMF), the World Bank, the Reserve Bank of India (RBI), and the Securities and Exchange Board of India (SEBI).
The ministry officials are writing a consultation document on cryptocurrencies, said one of the officials, adding:
They have now reached out to institutional stakeholders both within and beyond the nation. They are adopting suggestions from the IMF and the World Bank. The official added:
“They will amend the consultation document based on that, and we will update it depending on the replies from the RBI and SEBI.”
According to the journal, the finance ministry’s consultation paper, which is scheduled to be finished within the next six months, will include how to deal with cryptocurrencies, related risks, and its status as an asset class, and would serve as the foundation for India’s crypto policy.
Nirmala Sitharaman, India’s Finance Minister, has stated on multiple occasions that the government has not determined whether to regulate or ban cryptocurrency. In the interim, crypto income will be taxed at 30%, and all crypto transactions will be subject to a 1% tax deducted at source (TDS).
Nada Choueiri, the IMF’s mission leader in India, warned that crypto assets presented substantial concerns, especially for financial stability. Without explicitly addressing India’s crypto policy, she stated that crypto assets can potentially be used for money laundering, terrorist funding, and other criminal purposes. Unless and until proper regulatory measures are put in place, the crypto asset ecosystem may suffer from major consumer protection issues such as fraud and cyberattacks. She also stated that the IMF is talking with other governments in order to develop an effective policy on crypto assets.
Gita Gopinath, Deputy Managing Director of the IMF, has stated that much more work is needed on the regulatory front for crypto and digital money. She noted that “we’ve clearly seen a rise in the usage of cryptocurrencies” prior to the Russia-Ukraine war, she noted, noting that it happens more in emerging economies than in others.
In December, Gopinath stated that regulation is extremely critical for this business. If something is used as an investment asset, then the laws that apply to other investment classes should also apply here.
