The Mint published Thursday that Indian finance ministry officials are currently discussing a framework to allow cryptocurrency, including with the World Bank (IMF), the Reserve Bank of India(RBI) and the Securities and Exchange Board of India.
One of the officials said, “We have drafted an advisory paper on cryptocurrency,” elaborating:
We have now reached out to all institutional stakeholders, both inside and outside the country. We are currently taking inputs from IMF and World Bank and incorporating them.
“We will update our consultation paper based upon that and based the responses from the RBI, SEBI. We will be updating it,” the official said.
The consultation paper of the finance ministry will address how to deal cryptocurrency, its risks and treatment as an asset class. It is expected to be completed in the next six-months, according to the publication.
Indian Finance Minister Nirmala Sitharaman stated repeatedly that the government is still undecided about whether or not to ban crypto. Crypto income will be subject to a 30% tax and all transactions will be subject to a 1% tax at source.
Nada Choueiri (mission chief for India at the IMF) stated to the publication that crypto assets pose significant risks, including financial stability. She did not comment on India’s crypto policy.
It is possible to misuse crypto assets for money laundering, terrorist financing, or other illegal activities. The crypto assets ecosystem may face serious consumer protection problems if it is not regulated effectively. This could include fraud and cyberattacks.
She also said that the IMF was working with other countries to develop a policy regarding crypto assets.
Gita Gopinath, IMF Deputy General Director, recently stated that there is still much work to be done on the regulatory side of crypto and digital money. She said that there was a clear increase in cryptocurrency use in emerging markets since the Russia-Ukraine conflict.
Gopinath stated in December that regulation is essential for this sector. This asset can be used as an investment asset. The rules that are applicable to other investment classes should also apply.
Bloomberg also reported Friday that India would adopt legislation regarding cryptocurrencies after there is a global consensus on crypto assets.