India may soon have greater clarity on the regulation of crypto assets as the government has stepped up its efforts in this direction.
The recent meeting of the Financial Stability and Development Board (FSDC), chaired by Union Finance Minister Nirmala Sitharaman, impressed upon members the need for a clear consensus on the legality of cryptocurrencies. The message was that regulators must accelerate the initiative.
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The Council discussed at length whether to legalize or ban crypto assets, according to two people familiar with the discussions.
“The status of crypto assets was among the main items on the agenda of the Council meeting. He was of the opinion that all ambiguities should be cleared up soon,” according to a well-informed senior official.
We learn that the discussions revolved around two key points: opinions on a complete ban and who should be the regulator if the government decides to legalize crypto assets. Other options such as a partial ban and allowing a few select crypto products were also offered, one of the officials said.
The meeting, which was attended by financial sector regulators and senior officials, deliberated on the concern of not complying with Financial Action Task Force (FATF) guidelines. FATF standards ensure a coordinated global response to prevent organized crime, corruption and terrorism and help authorities recover the money generated by these crimes.
India, like many other countries, is currently not FATF compliant on crypto assets. The FATF requires countries to have a clear position on legalizing or banning crypto assets.
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Opinions are divided within ministries on whether cryptocurrencies should be banned. The Reserve Bank of India, however, has come out in favor of a complete ban on crypto assets due to the risk associated with it.
The FM had recently raised the issue during a meeting with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, in New Delhi. The minister had said that the IMF should play a leading role in the regulation of cryptocurrencies and ensure a globally coordinated and synchronized approach on the matter.
In April, at the IMF and World Bank Spring Meetings, Sitharaman pushed for a global regulatory framework for cryptocurrencies, while warning of the potential risks they pose in relation to funding. terrorism and money laundering.
Subsequently, the Department of Economic Affairs of the Ministry of Finance said that the consultation paper on virtual digital assets was almost ready for publication. BS could not independently verify whether the white paper had been submitted.
In December 2021, during the winter session of Parliament, the government had entered the Cryptocurrency and Official Digital Currency Regulation Bill 2021, to provide a framework for digital currencies. The bill was never introduced as some sections of the government felt the need for in-depth discussions on the subject.
In the Union budget for 2022-2023, the government defined crypto as virtual digital assets and also imposed a 30% tax on gains from such transactions. It also proposed a 1% withholding tax on all such transactions from July 1, 2022. The government had clarified that taxation did not imply that it was legalizing virtual assets.
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Rapid Tracking Of Cryptocurrency Asset Status May Be On The Way
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