Cryptocurrency Policy in India: Discussion Paper Lined Up, Stakeholders Consulted

India is all set to gear up its crypto policy! India plans to release a significant discussion paper on its cryptocurrency policy by September. The paper will outline the country’s stance on digital assets and solicit feedback from stakeholders to shape future regulatory actions. So far there are no laws and crypto enthusiast expects softer crypto rules.

Taking lessons from Hong Kong, Dubai, and Singapore on regulations, will India be able to tap into this multi-million dollar industry?  

Understanding the Discussion Paper

According to the report, Ajay Seth, Economic Affairs Secretary, stated that the discussion paper will present the key issues surrounding cryptocurrencies and invite stakeholder input. This approach is intended to foster a broad consensus rather than immediately implementing comprehensive legislation.

Views are Differing

A special inter-ministerial group, including members from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is leading the policy development. The RBI is cautious about recognizing cryptocurrencies due to concerns about economic stability. On the other hand, SEBI supports regulating digital assets and believes that multiple authorities should oversee them.

What’s the Delay About?

The key point here is that last year in September Mr Seth said India would decide its crypto policy stance in “the coming months.” It’s been nearly 10 months since. Importantly, Seth’s latest interview does not suggest a commitment to regulating crypto through comprehensive legislation but instead, a position based on stakeholder consensus on the matter.

This means if RBI and other opposing stakeholders win the day in consensus-building efforts then India’s crypto policy stance will remain unchanged and no legislation will enter parliament.

India and Crypto: What’s the History?

At present, India does not have comprehensive crypto regulations. The existing framework focuses on anti-money laundering (AML) and electronic funds transfer (EFT) compliance. Crypto entities are required to register with the Financial Intelligence Unit (FIU-IND) to adhere to international standards set by bodies like the Financial Action Task Force (FATF).

Looking Ahead

The discussion paper will address whether additional regulatory measures are necessary beyond the current AML and EFT requirements. Seth mentioned that India is considering global perspectives on crypto regulation, especially in light of its presidency of the Group of 20 (G20), which has emphasized consensus-based global crypto rules.

This move is expected to provide clearer guidelines for the cryptocurrency industry in India and reflect a more informed and balanced approach to digital asset regulation.

The crypto industry is eager for clarity. Let’s hope the discussion paper delivers.