India’s Crypto Regulation Framework Set for Release After Stakeholder Review

According to Moneycontrol, India plans to release a discussion paper by September that will outline its position on cryptocurrencies. This development was verified by Economic Affairs Secretary Ajay Seth in a recent interview, wherein he emphasized the significance of stakeholder consensus in creating policy.

Seth highlighted the government’s approach to gathering input from relevant parties. “The policy stance is how does one consult relevant stakeholders, so it is to come out in the open and say here is a discussion paper these are the issues and then stakeholders will give their views,” said Seth. An inter-ministerial group, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is currently working on the broader cryptocurrency policy. The group aims to release the discussion paper before September.

Regulatory Perspectives

The RBI has been consistently wary of legitimizing cryptocurrencies or stablecoins, citing risks to macroeconomic stability. In contrast, SEBI has shown openness to regulating digital assets, suggesting that oversight of cryptocurrency trading should involve multiple authorities. Despite the lack of comprehensive cryptocurrency legislation, India has imposed significant taxes on crypto and mandated that crypto entities register with the Financial Intelligence Unit (FIU-IND) to comply with anti-money laundering (AML) and terrorism financing standards set by global bodies such as the Financial Action Task Force (FATF).

Seth explained the current regulatory focus: “In India, it (cryptocurrencies) is being regulated from the perspective of AML and EFT (Electronic Funds Transfer) alone. Regulation starts and ends there, it cannot be beyond that, so should the remit be more? What should be the policy stance? All that will come out in the discussion paper.”

In September 2023, Seth mentioned that India would analyze and determine its stance on cryptocurrencies in the “coming months” after evaluating global leaders’ positions on suitable crypto regulatory framework. This statement was made during India’s presidency of the Group of 20, where it prioritized building a consensus on global cryptocurrency regulations.

As India prepares to release its cryptocurrency policy discussion paper, the involvement of key financial authorities and the emphasis on stakeholder input signal a comprehensive approach to addressing the challenges and opportunities presented by digital assets.