India Highlights Global Cooperation as Key to Regulating Virtual Digital Assets

The Indian government has made it clear that there is no defined timeframe for enacting thorough laws pertaining to virtual digital assets (VDAs). The remark was made in response to questions regarding the government’s efforts to create a formal regulatory framework for cryptocurrency assets that were posed in the Lok Sabha.

Global Cooperation Takes Priority

The government emphasized that creating effective VDA regulations requires a unified global approach to prevent regulatory arbitrage. While it continues to consult industry stakeholders and international organizations, both formally and informally, India believes borderless crypto assets demand deeper international collaboration.

“Policy efforts on VDA are needed globally in order to avoid regulatory arbitrage,” the government noted. It stressed that achieving meaningful regulation requires collective international action, a sentiment echoed through India’s leadership during its G20 Presidency.

The adoption of the “G20 Roadmap on Crypto Assets” has underscored the urgency for global coordination. Emerging economies, in particular, were urged to implement risk-sensitive regulations to address challenges posed by the growing VDA market.

India has already taken steps to bring VDAs under its regulatory framework. For instance, taxation on VDA-related income is in place, and VDA transactions have been covered under the Prevention of Money Laundering Act (PMLA) since March 2023. However, a lack of comprehensive guidelines leaves room for uncertainty among market participants.

The government recognizes the fine balance needed between innovation, investor protection, and financial stability. It reiterated that an international consensus is crucial to develop policies that address risks without stifling technological advancements.

With crypto assets transcending borders, India maintains that effective investor protection cannot be achieved without strong international cooperation. The absence of a clear regulatory timeline means stakeholders must continue to navigate evolving domestic policies alongside global developments.