India's Impending Crypto Policy: Decisions Expected in the Coming Months
India is actively delving into the realm of cryptocurrencies, spurred on by its influence on the G20's endorsement of a global framework for digital currencies.
A senior official from India's Finance Ministry announced on Sunday that the nation will conduct a comprehensive evaluation to formulate its stance on cryptocurrencies in the coming months. This decision will be guided by the viewpoint endorsed by global leaders on an acceptable regulatory framework for cryptocurrencies, a subject extensively discussed during the Group of Twenty (G20) deliberations.
Ajay Seth, the Secretary of the Department of Economic Affairs, addressed a group of journalists during the G20 leaders' summit, underlining that India's official position will be established in the near future. He elucidated that since the G20 has already established a framework for assessing risks, India will closely scrutinize the consensus among global leaders. Based on this evaluation, India will devise a robust policy tailored to its unique circumstances.
India's stance on cryptocurrencies has been under close examination for an extended period. Once a flourishing industry, it faced setbacks in the form of stringent taxes, a downturn in the cryptocurrency market, a period of regulatory uncertainty, anti-money laundering regulations, and regulatory actions against major cryptocurrency exchanges. The attention on India's position on cryptocurrencies heightened when it made the formulation of global cryptocurrency regulations a top priority during its G20 presidency. This objective was accomplished with the release of a comprehensive "synthesis paper" jointly authored by the International Monetary Fund (IMF) and the Financial Stability Board (FSB).
Seth's remarks on Sunday indicate a potential shift towards India creating its own cryptocurrency legislation. This signifies a departure from earlier plans when India had temporarily suspended efforts to enact comprehensive cryptocurrency legislation through a bill in early 2022.
Officials from India have previously indicated that the nation might not necessarily require a formal bill to establish its cryptocurrency regulations.
While the FSB has mandated a review of the progress in implementing its recommendations by the end of 2025, India has already implemented anti-money laundering measures and established a tax framework for cryptocurrencies. This may be sufficient, as an official informed Bitsday in August. Although the Reserve Bank of India has advocated for a crypto ban, the government has not yet taken a definitive stance on the matter, and at present, a complete ban seems unlikely. The synthesis paper also acknowledged that a blanket ban would not be an effective approach.
Before the G20 Leaders' Summit last weekend, India had released its official statement on cryptocurrency as part of its presidency note. This document outlined India's position on cryptocurrencies as preliminary recommendations before the synthesis paper was finalized.