Centre Likely To Release Crypto Regulation Paper In June: Report

The Indian government will likely release a detailed discussion paper on the policy framework options for crypto assets in June.

An ET report, citing people close to the matter, said that the paper will likely draw from the synthesis paper jointly developed by the International Monetary Fund (IMF) and the Financial Stability Board (FSB).

It will also seek opinions on practices adopted by various jurisdictions, the report added.

“Discussion paper on crypto assets is being given finishing touches” and will be posted for public comments next month,” one of the sources told ET.

A senior government official told the publication, “India will take a call keeping in view its own national interest. No knee-jerk decision would be taken in view of the wide ramifications of this industry.”

The paper was originally due for release in September 2024.

India’s Ambiguous Stand On Crypto Policy

Indians have poured money into cryptocurrencies in recent years despite the country’s tough regulatory stance and steep trading taxes. According to a report by blockchain analytics firm Chainalysis, India continued to lead the adoption of cryptocurrency in 2024 for the second consecutive year. 

In 2022, India started imposing a TDS (tax deduction at source) of 1% on the transactions of cryptocurrencies and also levied a 30% tax on gains on the digital asset. 

Later, it also mandated all cryptocurrency exchanges to register with the country’s Financial Intelligence Unit (FIU) and sent show cause notices to entities which were operating illegally in the country. In 2023, FIU sent notices to nine crypto exchanges including Binance, Kucoin and Bitfinex for operating in India via offshore entities. 

In February, economic affairs secretary Ajay Seth said that multiple jurisdictions have changed their stance towards digital assets in terms of usage, their acceptance and importance, and underlined that virtual assets “don’t believe in borders”, and therefore, India’s stance on crypto cannot be unilateral.

India’s change in its strong stance against crypto assets comes at a time when the Trump administration in the US has rekindled hopes for a wider adoption of cryptocurrency and NFTs. 

Earlier this year, Trump passed an executive order, calling for the establishment of a working group, whose responsibilities include drafting a new regulatory framework for crypto in the US and proposing criteria for a crypto reserve.

Last week, the Supreme Court of India also pulled up the Centre for delay in formulating cryptocurrency regulations.