Sunday, December 4, 2022

Indian Finance Ministry Preparing Consultation Paper for Crypto Regulations

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The Indian government is engaged in consultations with domestic and international agencies on crypto regulations. It expects to prepare a consultation paper and invite public comments on it in about six months, said a senior finance ministry official.

“At present, we are engaged in consultation with institutions like the International Monetary Fund (IMF), World Bank, and the Financial Stability Board (FSB). While a global consensus on the issue may take time, we are working on a consultation paper on cryptoassets to formulate our own views on the matter. We will release it for public consultation in about six months’ time,” Ajay Seth, Secretary, Department of Economic Affairs, Finance Ministry, said on Monday. 

At the moment, India doesn’t have a domestic regulatory framework for dealing with digital assets and it’s caused a sharp polarization of opinion with some finding it responsible for the flight of skill and innovation from the country.

“Consultation paper fairly ready. We’ve gone through deep dive and consulted not just domestic stakeholders but also orgs (organizations) like IMF, and World Bank. We hope we’ll soon be in a position to finalize the consultation paper,” Seth told media persons.

The top finance ministry bureaucrat reminded the Indian Prime Minister’s assertions that dealing with crypto assets requires a global framework of regulations.  

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“This point has been made time & again. If you recall, PM at the Sydney conference had made that point. Thereafter he made that point on more than one forum. Even other countries are talking about the same thing that we require a global paradigm to deal with digital assets,” Ajay Seth said.

The finance ministry’s revelation that it’s preparing a consultation paper on crypto regulation seems to be a balancing act by the Indian government which has so far been siding with the regulators – the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI).

Recently, Coinbase CEO Brian Armstrong accused the RBI of exerting informal pressure and imposing a shadowban on crypto exchanges in India. In a recent interview, RBI Governor Shaktikanta Das, referring to the current market downturn, said cryptocurrencies have no underlying value and justified RBI not regulating them.

“We have been cautioning against crypto and look at what has happened to the crypto market now. Had we been regulating it already, then people would have raised questions about what happened to regulations,” Das said.

India has introduced a 30% tax on profits from crypto transactions beginning April 1, 2002, and 1% TDS effective from July 1. 

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