According to sources, the Indian government is waiting to devise any set cryptocurrency law till a global consensus emerges on regulating such assets.
Crypto Laws Undefined; Waiting For ‘Uniform Approach?’
The Indian government has pressed pause on its plans of formulating crypto legislation. According to a source, who wanted to stay anonymous and is close to the matter, the government is waiting to decide on the direction of the legislation based on the general global consensus. This means that the government will not be implementing a crypto law or tightening digital assets regulations anytime soon.
Despite the recent downturn in the industry, crypto investments are on a high. The Modi government is unsure about which way to go regarding this asset class. Speaking virtually at the 2022 World Economic Forum’s virtual Davos Agenda conference, Prime Minister Narendra Modi had addressed the concerns around cryptocurrency regulations and the trepidations around crypto investments. His statement that the global communities need to maintain a uniform approach to tackle the challenges posed by cryptocurrencies bears relevance in the latest context.
India’s Crypto Struggles
India’s crypto industry has been stuck in regulatory limbo for years. The government and financial institutions have consistently questioned the legitimacy of cryptocurrencies as an investment asset and as a mode of payment. The central bank, RBI, has repeatedly warned citizens of the security risks of dealing with crypto by comparing them with Ponzi schemes and labeling them a threat to financial sovereignty. Back in April 2018, the RBI had imposed a blanket ban on all associations between banks and financial institutions with any crypto companies. However, the Supreme Court of India overturned the ban in March 2020, calling it unconstitutional. Crypto investments in the country flourished after that, with the Indian crypto market growing by a staggering 641% between July 2020 to June 2021, according to a Chainalysis report.
Financial Budget 2022
However, the uncertainty surrounding this industry has been crippling investors, with many of them demanding a clear regulatory framework for digital assets. Therefore, when Finance Minister Nirmala Sitharaman announced a 30% crypto tax during Budget 2022, most industry experts welcomed the high taxation, believing that it would provide much-needed guidelines in the industry. Additionally, in the speech, Sitharaman also talked about providing for TDS of 1% on the payment made in relation to transfer, above a monetary threshold. Finally, the budget speech also revealed the RBI’s plans of launching a central bank digital currency (CBDC) by the year 2023.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
