The government of India is consulting with the World Bank, the International Monetary Fund (IMF) and Indian regulators for developing the crypto policy of the country. An official of the finance ministry of the country disclosed that they had gotten in touch with institutional stakeholders, both within the country and outside as well. This involved inputs from the World Bank as well as the IMF. The authorities that are being consulted by the Indian finance ministry officials within the country include the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). One of the officials revealed last Thursday that they had already drafted a consultation paper on the matter.
The official revealed that they would update the consultation paper in question with the inputs they receive from the stakeholders, both in the country and out. The consultation paper of the finance ministry will cover the risks associated with cryptocurrencies, how they are to be dealt with and how it should be treated as an asset class. The consultation paper’s finalization is expected to occur in the next six months and it would serve as the basis for the crypto policy in the country. Nirmala Sitharaman, the Indian Finance Minister, has stated on various occasions that the government has not decided whether they are going to ban or regulate cryptocurrency.
In the meantime, they have introduced a taxation policy for cryptocurrencies in the country, which went into effect on April 1st. All crypto income will have a tax of 30% imposed on it, while there will also be a 1% tax deducted on source (TDS) on all crypto transactions that are conducted. Nada Choueiri, the IMF’s mission chief for India, said that there were significant risks associated with crypto assets, which include those associated with financial stability. She did not specifically comment on India’s crypto policy, but said that crypto assets could be used for illegal activities like terrorist financing and money laundering.
She added that there could be serious consumer protection challenges like cyberattacks and frauds in the crypto assets ecosystem, unless they implement effective regulatory measures. She went on to say that the IMF was also consulting with other countries for developing an effective policy for dealing with crypto assets. Gita Gopinath, the IMF Deputy Managing Director, stated that there was a lot of work to be done on digital money and crypto, as far as regulation is concerned.
She said that the use of cryptocurrencies had certainly increased, even before the Russia-Ukraine war, and it had occurred more in emerging countries than others. Back in December, Gopinath had said that regulation is of the utmost importance in this sector. She said that if people are using crypto as an investment asset, then the same rules applicable to other investment classes should be applicable here as well. Furthermore, a report on Friday noted that a regulatory framework for cryptocurrencies would only be developed in India when a global consensus is reached for this asset class.