Even though it has one of the largest crypto economies globally, it is quite surprising to discover that India has yet to have a defined and clear regulatory framework for these digital assets. Nirmala Sitharaman, the Indian finance minister, has said that it is possible that this regulatory uncertainty would persist for a while longer in the country. These comments came from the finance minister when she was discussing the Union Budget for 2022 to 2023 at Rajya Sabha, which is the upper chamber of the bicameral parliament in India. According to Sitharaman, they did not have any immediate plans of imposing a ban on cryptocurrencies.
However, she added that they did not have any immediate plans of launching a regulatory framework either. She added that the ministry was still reviewing the inputs they had obtained from consultations, after which they would subsequently decide whether to ban or not. The top official also discussed the recent taxation measures that had been introduced for cryptocurrencies in the country. A 30% tax had been recommended on crypto transactions during the discussions for the 2022-2023 Union Budget. She went on to say that India held the sovereign right to impose a tax on the revenues that are generated through crypto transactions.
Sitharaman stated that charging taxes on crypto transactions in no way indicates that they are legalizing this asset class. According to the finance minister, the government’s ability to tax these transactions is quite different from the action of recognizing the said asset class. The statements of Sitharaman echoed the sentiments that had already been expressed earlier this week by the head of the tax body in India. The regulator stated that crypto transactions did not mean that these digital assets were legal in the country. There has been a great deal of discussion in the crypto communities about the crypto regulatory framework that might be introduced in India.
Near the end of last year, the crypto space had seen rumors that cryptocurrencies would be banned in India in the Winter Session of the parliament. But, these rumors were put to rest significantly when a crypto tax was instead introduced in the Union Budget. However, the recent statements from the head of the tax authority in the country and Sitharaman, it is possible that these rumors could once more start flying because the threat of ban still exists. They had shelved the bill that was aimed at banning cryptocurrencies and would not be discussed in the current session.
While the country is weighing the pros and cons associated with digital assets, it has also been working on developing its own central bank digital currency (CBDC). The launch of this CBDC is expected to be near the end of 2022 or in 2023. The uncertainty associated with crypto regulations in the country is quite similar to what was previously seen in Russia. Until earlier this week, there had been a threat of a potential crypto ban in Russia, but now crypto has been legalized for use as a currency.