India Not Considering Legislation to Regulate Cryptocurrencies, Says Government

The Indian government has made it clear in a recent reply to the Parliament that it is not considering any legislation to regulate cryptocurrency transactions. This move comes despite India’s strict laws on digital assets, showcasing the government’s preference for oversight through existing measures rather than introducing new regulations for Virtual Digital Assets (VDAs).

This stance reflects a cautious approach, focusing on strict tax laws and anti-money laundering measures rather than direct regulation of Virtual Digital Assets (VDAs).

Responding to a Parliament enquiry, the Finance Ministry of India revealed that currently there isn’t any proposal to bring legislation for regulating the sales and purchase of virtual digital assets in the country.

The enquiry was raised by a member of Parliament seeking details about the status of VDAs, the number of corporations and platforms engaging with VDAs in the last five years, and what plans the government is making for regulatory oversight.

Pankaj Chaudhary, Minister of State in the Ministry of Finance in India, revealed that VDAs are unregulated in India and the government does not collect data concerning these assets.

“However, for specific oversight purposes such as Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), the Financial Intelligence Unit India (FIU-IND) has been authorized to designate Virtual Digital Asset Service Providers (VDSAPs) as Reporting Entities (RE) under the Prevention of Money Laundering Act, 2002 (PMLA). Additionally, Law Enforcement Agencies (LEAs) have the mandate to address illicit activities under existing legal provisions,” he said.

Reactions From the Community

The Indian Web3 community has responded positively to this development. Bharat Web3 Association welcomed the recent comments by the Finance Ministry on the upcoming discussion paper on VDA policy.

Dilip Chenoy, Chairman of Bharat Web3 Association, exclusively told The Shib Daily that the association looks forward to studying the paper in detail when released for public consultation and offering its policy inputs.

“We urge the government and regulators to take the lead in formulating a comprehensive regulatory regime for Web3/VDAs in India. BWA continues to work with FIU-IND on strengthening the AML/CFT framework for VDA Service Providers introduced last year and with the Ministry of Finance on rationalising the tax regime for VDAs introduced in 2022,” Chenoy said.

India’s position has also been influenced by its role in the G20. The Group of Twenty (G20) is an international forum consisting of 19 countries and the European Union, which plays a prominent role in addressing international financial issues and providing global economic cooperation.

Last year, India played a key role in adopting the International Monetary Fund (IMF) and Financial Stability Board (FSB) Synthesis Paper. The paper highlights a coordinated global policy and regulatory framework for crypto assets.

The Bharat Web3 Association has also been enthusiastic regarding India’s leadership in building consensus on crypto assets during the G20 presidency.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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