Summary:
India's government to release a consultation paper on cryptocurrency regulations between September and October 2024.
The paper aims to gather stakeholder feedback on effective regulation of crypto assets.
Finance Minister Nirmala Sitharaman emphasizes international consensus on regulatory approaches.
Current tax regime imposes a 30% flat tax on crypto profits, raising concerns among industry leaders.
The RBI warns of the lack of accountability and stability in the crypto ecosystem.
The Indian government, through a panel led by the Secretary of the Department of Economic Affairs (DEA), is set to unveil a consultation paper on cryptocurrency regulations between September and October 2024. This initiative aims to gather feedback from stakeholders to craft effective regulations, highlighting the nation's commitment to both global and domestic challenges posed by digital currencies.
India to Release Consultation Paper on Cryptocurrency Regulations
According to a report by CNBC-TV18, the consultation paper will focus on how best to regulate crypto assets, reflecting the government's proactive approach in shaping its cryptocurrency landscape. This move follows Finance Minister Nirmala Sitharamanâs statement in October 2023, indicating that G20 nations have aligned on a unified regulatory approach. Sitharaman stated:
"Given the understanding that globally now all of us are on the same page about how regulations can happen, country and their specific legislative arrangements will also have to be worked out."
Although India currently lacks a specific regulatory framework for cryptocurrency, it has implemented a 30% flat tax on crypto profits and a 1% TDS on transactions since 2022, which many industry leaders argue hinders growth. The 2024-25 Union Budget has maintained these existing tax regulations, prompting calls for ongoing dialogue between industry leaders and regulators to cultivate a more supportive environment for the Web3 sector.
The Reserve Bank of India (RBI), in its May 2024 bulletin, cautioned retail investors that the crypto ecosystem lacks accountability and stability, warning that some cryptocurrency systems may be prone to crises without proper safeguards. However, the Orissa High Court reaffirmed that cryptocurrency trading and transactions are neither banned nor illegal in India.
In recent developments, Binance, the largest cryptocurrency exchange globally, has re-entered the Indian market after adhering to local regulations.
Do you think India will release a consultation paper on crypto in the next few months? Let us know in the comments below.
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