India is not looking to regulate the cryptocurrency sector anytime soon according to Minister of State for Finance Pankaj Chaudhary.
Chaudhary’s comments were in response to questions from MP GM Harish Balayogi, seeking clarity on the government’s stance on cryptocurrencies.
Specifically, Balayogi asked about the government’s research and initiatives related to the crypto sector and whether any forthcoming legislation is planned.
In his written reply, Chaudhary stated there is “no proposal” to regulate the “sales and purchase” of cryptocurrencies, referred to as virtual digital assets in the Indian constitution.
Regarding oversight, Chaudhary said the Financial Intelligence Unit (FIU) is “authorized” to designate Virtual Digital Asset Service Providers as reporting entities.
These entities must adhere to the Prevention of Money Laundering Act (PMLA) of 2002, allowing the FIU to monitor illicit activities like money laundering and terrorism financing.
Citing existing measures, Chaudhary mentioned that law enforcement agencies, including the Reserve Bank of India, can investigate illegal activities under current laws.
For instance, the Directorate General of GST Intelligence recently demanded $86 million in unpaid taxes from Binance.
Chaudhary noted that the government does not collect data on cryptocurrencies as they are an “unregulated” sector.
He referred to the G20 Roadmap on Crypto Assets, adopted under India’s G20 presidency, which includes recommendations for crypto regulations.
According to Chaudhary, G20 nations are evaluating “country-specific” risks and benefits of cryptocurrencies and will coordinate with global “standard setting bodies” before taking action.
Chaudhary did not mention the upcoming discussion paper expected to clarify the government’s stance on cryptocurrencies.
Last month, Ajay Seth, Secretary of Economic Affairs, mentioned that an inter-ministerial group is working on a “wider policy for cryptocurrencies,” expected by September 2024.
Currently, India has a licensing regime mandating locals report crypto holdings and pay a 30% tax on capital gains, per a 2022 tax law.
The country is also advancing its central bank’s digital currency, the e-rupee, with 1 million retail transactions as of late June. Payment firms like AmazonPay and GooglePay have shown interest in enabling e-rupee transactions.
