Centre To Release Cryptocurrency Discussion Paper Before September

SUMMARY

The paper will cover regulations for cryptocurrencies and seek inputs from industry stakeholders on the outlined ideas, economic affairs secretary Ajay Seth said.

Seth also said that an inter-ministerial group, which also includes representatives from the RBI and SEBI, is currently working on a broader policy for cryptocurrencies.

The RBI has been a staunch opponent of cryptos, saying they pose macroeconomic risks.

The Centre is set to release a discussion paper on cryptocurrencies before September, economic affairs secretary Ajay Seth said.

The paper will cover regulations for cryptos and seek inputs from industry stakeholders on the outlined ideas, Seth told Moneycontrol in an interview.

“The policy stance is how does one consult relevant stakeholders, so it is to come out in the open and say here is a discussion paper, these are the issues and then stakeholders will give their views,” the publication quoted him as saying.

Seth said that an inter-ministerial group is currently working on a broader policy for cryptocurrencies. The group also includes representatives from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

The paper will also contain suggestions on the scope of regulations for cryptocurrencies in India. “In India it (cryptocurrencies) is being regulated from the perspective of AML (anti-money laundering) and EFT (electronics funds transfer) alone. Regulation starts and ends there, it cannot be beyond that, so should the remit be more? What should be the policy stance? All that will come out in the discussion paper,” the secretary said.

The move to release a discussion paper follows the endorsement of guidelines set by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) by G20 member countries during India’s presidency last year.

The development comes at a time when the crypto industry in India has been under stress due to policy uncertainty. The RBI has been a staunch opponent of cryptos, saying they pose macroeconomic risks. The central bank has also pushed for a ban on cryptos.

Meanwhile, SEBI has said that several regulators should oversee crypto trade. Amid all these, the Centre hasn’t clearly spelled out its stance on the digital assets.

However, the government introduced a 30% tax on crypto earnings and a 1% TDS on crypto transactions in 2022, significantly impacting trading volumes on Indian exchanges. Prime Minister Narendra Modi and finance minister Nirmala Sitharaman have in the past called for a global framework to regulate cryptos.

Amid these uncertainties, the funding for crypto startups has plunged and a number of startups like WeTrade and Pillow even shut down.