India Holds Off on Cryptocurrency Regulation Amid Economic Uncertainty
The Ministry of Finance states that India does not currently have any plans to regulate cryptocurrency transactions. The government is assessing the risks and benefits of cryptocurrencies, aiming for a policy by September 2024.
Current Stand on Cryptocurrency Regulation
Recently, GM Harish Balayogi, a member of the Lok Sabha, raised questions about the country's laws governing virtual digital assets (VDAs). Pankaj Chaudhary, the Minister of State for Finance, responded in writing, emphasizing that India does not gather data on cryptocurrencies and they remain unregulated in the country. Chaudhary stated, "At this time, there isn’t a proposal to introduce laws in the nation to control the buying and selling of virtual digital assets."
Government Evaluates Risks Without Immediate Regulation
The Minister mentioned that the Financial Intelligence Unit India (FIU-IND) has been authorized to designate Virtual Digital Asset Service Providers (VDSAPs) as Reporting Entities under the Prevention of Money Laundering Act, 2002 (PMLA) for specific oversight purposes, including anti-money laundering (AML) and counter-terrorism financing (CFT). Law Enforcement Agencies (LEAs) are also responsible for addressing illegal actions in accordance with existing legal regulations.
Despite the absence of specific laws to regulate cryptocurrency, current regulations give law enforcement agencies, including the Reserve Bank of India, the authority to act against illegal activities. The Indian government is actively involved in global discussions on cryptocurrencies. Under India's leadership, the G20 adopted a roadmap on crypto assets, setting the stage for a comprehensive policy approach. The government aims to provide a discussion paper outlining its stance by September 2024.
Emerging Acceptance of the e-Rupee
Meanwhile, the e-rupee, India’s central bank digital currency (CBDC), is gaining acceptance, with significant interest from major payment businesses. As the landscape evolves, Indian investors and cryptocurrency-related organizations need to stay informed about regulatory changes and navigate the existing frameworks strategically.
