FSDC Members Call For Fast-Tracking Decision On Legality Of Cryptos: Report

The Financial Stability and Development Council (FSDC) during its meeting earlier this week reportedly discussed the current status of cryptocurrency assets in the country and called for fast-tracking the decision on their legality.

“The status of crypto assets was among the key agenda discussed in the Council meeting. It was of the view that all ambiguities should be put to rest soon,” Business Standard quoted an official as saying.

The Council noted that it wants to take a final call on the matter and has sought a collaborative approach to deal with the issue.

The FSDC is an apex-level body led by the Finance Minister. The Minister of States for Finance, secretaries of the various departments of the finance ministry, governor of the Reserve Bank of India, and chairpersons of SEBI and IRDAI are among its members. 

While a section of FSDC members called for a complete ban on cryptocurrencies, another section sought a partial ban, the report said. 

The officials also sought more clarity on who would regulate cryptocurrencies if the government legalises them. Other attendees also suggested that the government should consider granting approval to select crypto products to test the markets. 

Another issue raised at the meeting was India’s non-compliance with the Financial Action Task Force (FATF) guidelines. The FATF mandates that nations have a clear stance on legalisation of crypto assets.

The Vague Stance

The development comes at a time when there is no clarity on the legal status of cryptocurrencies, with contrasting statements coming from the government and the RBI.

In May, Economic Affairs Secretary Ajay Seth had said that a consultation paper on cryptocurrencies was ‘fairly ready’ and that it would be submitted to the government soon. Since then, there has been no clarity if the paper was submitted to the Finance Ministry or is still under formulation.

Last week, Finance Minister Nirmala Sitharaman, during her meeting with International Monetary Fund (IMF) MD Kristalina Georgieva, sought a ‘global coordinated and synchronised approach’ to regulate crypto assets. Later, Georgieva backed the country’s demand and said that the IMF will dedicate a team to work on the matter. 

Even as Sitharaman has sought more clarity on the matter, the government has left no chance to tax the burgeoning sector. Earlier this year, 30% tax was imposed on all income from crypto and a 1% TDS on crypto transactions. 

Meanwhile, the RBI has stuck to its demand and called for a complete ban on crypto.

The need for clarity also comes amidst a spate of raids and seizures at the offices of almost all major cryptocurrency exchanges including WazirX, Coinswitch Kuber and Vauld. These platforms are in the dock for allegedly flouting money laundering and FEMA (Foreign Exchange Management Act) norms.

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