After months of consultation with domestic and foreign stakeholders and organizations such as the IMF and World Bank, India is close to finalizing a consultation paper on cryptocurrencies. According to Economic Affairs Secretary Ajay Seth, the government is “pretty ready”.
India’s Consultation Paper on Cryptocurrencies
While addressing reporters in the context of an event, Seth stressed the need for global consensus on cryptocurrencies and added that India will review regulations implemented in other countries before proceeding. decide how it would regulate the vast industry.
He was quoted saying:
“First, our consultation document is quite ready and we have done a deep dive and consulted not only with national institutional stakeholders, but also the World Bank and the International Monetary Fund. We therefore hope that we will soon be able to finalize our consultation document.
Hostile Crypto Climate
The Indian government is known for maintaining the regressive ‘blockchain, not bitcoin’ stance, which has forced many crypto companies to relocate to a jurisdiction with friendlier regulations. The tough crypto tax laws introduced in this year’s annual budget were hastily passed without any recommendations from experts and ecosystem stakeholders, driving many investors away from local exchanges. Under the new rules, cryptocurrency profits are taxable at 30%. On the other hand, there is no provision to offset and carry forward unclaimed losses.
In another setback, the National Payments Corporation of India (NPCI), which oversees the Unified Payments Interface (UPI), recently released an official statement stating that it is not aware of any crypto exchange using UPI. For the uninitiated, UPI is a commonly used real-time instant payment system that facilitates interbank transactions using a mobile phone. The statement was deemed bizarre because many domestic crypto players, including WazirX, were already offering UPI services through mobile wallets. Soon, UPI services for other exchanges serving the country’s crypto ecosystem were also disabled.
Coinbase, which had just announced its entry into India, suspended operations within three days. Its CEO, Brian Armstrong, called the Reserve Bank of India (RBI) and accused the agency of violating the Supreme Court order and exerting “informal pressure”. Meanwhile, the RBI is more eager to launch an internal CBDC and revealed investigate the pros and cons of introducing one.
Despite the lack of clarity and the hostile regulatory climate, India’s digital asset market has continued to grow. According to Finder’s NFT games adoption report, India has reached the top 3 countries where play-to-earn (p2e) games are booming.
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