India is actively working on a crypto regulatory framework, which is expected to materialize into legal legislation in the coming five to six months. This development follows the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB), which India and other G20 nations have embraced.
A Global Approach to Crypto Regulation
Sidharth Sogani, the CEO of Crebaco, a firm that has collaborated with government agencies and ministries, revealed that the Indian government is crafting a five-point crypto legislative framework with a global perspective. This initiative comes after India’s successful participation in the recent G20 summit, where significant economic announcements were made, including the welcoming of the IMF-FSB crypto regulatory guidelines by India and other G20 countries.
The IMF-FSB recommendations advocate for the regulation of the crypto market instead of imposing a blanket ban. These guidelines offer a roadmap that G20 countries can follow to create independent yet collaborative crypto legislations.
Insights into India’s Crypto Strategy
Crebaco, a blockchain analytic firm that has consulted for several G20 committees and nations, shared insights into India’s approach to crypto regulation. According to Sogani, the Indian government is focusing on the following aspects in its five-point regulatory framework:
- Implementing advanced Know Your Customer (KYC) protocols for crypto companies, aligning with the Foreign Account Tax Compliance Act and existing Anti-Money Laundering standards.
- Mandating crypto platforms to provide real-time proof-of-reserve audits to regulators.
- Establishing a uniform taxation policy across nations.
- Potentially granting crypto exchanges a status akin to authorized dealers, similar to banks, under the Reserve Bank of India (RBI) guidelines.
- Requiring key positions such as Money Laundering Reporting Officer for crypto platforms.
Sogani emphasized that the global realization that banning crypto is not a viable solution has led many nations to opt for a regulatory approach instead. He noted that proper regulations could foster substantial growth in the already robust crypto ecosystem while minimizing the risks of scams and illicit activities.
A Collaborative Future
India has been advocating for a collaborative approach to crypto regulations globally. Prime Minister Narendra Modi echoed this sentiment at the G20 summit, emphasizing the need for global cooperation, especially in areas like crypto taxation.
An executive from the finance ministry confirmed that the government is considering the IMF-FSB recommendations as a foundational framework to build upon in the coming months. The official also dismissed the option of banning cryptocurrencies, highlighting the challenges of enforcing such a ban when other countries are moving towards regulation.
Currently, India does not have specific crypto regulations, although a 30% tax on crypto gains was introduced in 2022. The recent developments and the finance ministry’s positive outlook indicate a promising future for the crypto industry in India, with substantial legislation possibly emerging in the near future.