India can finalise crypto legislation through international collaboration

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The Finance Ministry is in charge of crypto assets and their ecosystem, and any legislation on the subject would be effective only through international collaboration and risk assessment. This was told to the Parliament on Friday.

In a written reply, Minister of State for Finance Pankaj Chaudhary told the Lok Sabha, “Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”

Chaudhary was speaking about the current status of the crypto bill in the country, as well as the timeline for when it would be tabled and open for public input. Bhartruhari Mahtab, a BJD member, posed the question. Answering the question “whether the Government proposes to regulate or restrict the Virtual Digital Assets (VDA) in the country”, Chaudhary said, “Currently, crypto assets are unregulated in India. Crypto exchanges are not registered with the government.”

Mahtab had also inquired as to which department would regulate crypto as well as virtual digital assets other than crypto assets, such as NFT and decentralised applications.

Notably, the central government proposed in the Union Budget 2022-23 to tax gains on virtual digital assets at 30 percent and 1 percent TDS on crypto transfers. Crypto assets are highly volatile. Further, keeping the risks associated with crypto in mind, the government has called for international collaboration on crypto. The government also suggested tighter domestic reforms. Previously, before concluding her six-day visit to the United States in October, Finance Minister Nirmala Sitharaman stated in Washington D.C. that one of India’s agenda items during the G20 presidency was developing standard operating procedures (SoPs) for crypto.