India is moving closer to shaping its cryptocurrency regulations as the Department of Economic Affairs (DEA) prepares to release a consultation paper expected in September or October.
Context and Initiative
According to local reports, the paper will gather input from various stakeholders and could set the direction for digital currencies in the country. The paper is led by the DEA Secretary and comes at a time when global scrutiny of cryptocurrencies is increasing.
Implemented Measures
India has already taken some steps toward regulating crypto, such as introducing a 30% tax on gains and a 1% tax deducted at source in April 2022. These measures were the first attempts to bring crypto activities under some control.
Regulatory Authorities' Stance
The upcoming DEA paper is expected to address concerns from financial authorities like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). SEBI has suggested a multi-layered regulatory approach, where different agencies handle different aspects of crypto. However, the RBI remains cautious, warning that digital currencies could threaten the country’s financial stability.
These steps demonstrate India's serious intent to enforce strict oversight of the crypto sector, emphasizing international cooperation and prevention of illegal activities.
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