India has been talking about crypto regulation for years, but there is still no clarity on the matter. But now, the situation is changing, as the government is expected to respond next week to the recommendations made by the Parliamentary Finance Committee on virtual digital assets (VDAs).
Indian Government’s Crypto Regulation Response Expected Next Week
As per the latest reports, India’s crypto regulation debate is moving into another stage. The Parliamentary Standing Committee on Finance has reportedly finished its discussions on regulating virtual digital assets (VDAs). The committee chairman Bhartruhari Mahtab stated that the government would respond next week, after which the report would be finalized and submitted. Mahtab added,
“The basic question that arises for this committee is government is not accepting virtual digital assets, doesn’t want to regulate it, but not regulating it also leaves greater scope for different types of indulgences.”
Finance Committee’s Crypto Report: What to Expect?
Notably, the Finance Committee of India is now close to completing its work on VDAs. Over the past year, the committee has been studying the issue. The panel involved the Reserve Bank of India (RBI), the Central Board of Direct Taxes (CBDT), the Finance Ministry, and other stakeholders for discussions.
Now, the committee has completed the discussions and is waiting for the government’s response. The final report will be submitted by next week. This report could be an important development for the country’s crypto regulation as India has been waiting for regulatory clarity for years.
However, the report will only be a parliamentary recommendation, not an immediate crypto regulation. If the country needs to implement new laws, it would require further action from the government and Parliament. As of now, the next major step is the government’s response and the committee’s final report.
Unveiling India’s Current Crypto Regulatory Grey Area
Unlike other countries, India is in a special position in terms of its crypto regulation. Although crypto assets are taxed and subject to certain compliance rules, the sector lacks a clear regulatory framework.
“That actually is the point of concern. These are the grey areas which need to be tackled,” stated Mahtab. The main issue is that crypto is not yet recognized as a legal asset. Although crypto is not completely banned in India, it cannot be used for payments and similar activities.
One major grey area is regarding the authority that needs to regulate the industry. There is still no clarity on who should regulate the sector and under which framework. While exchanges and VDA service providers have compliance obligations with the FIU, there is no single crypto regulation that covers areas like market conduct, investor protection, exchange operations, and oversight of multiple assets.
What the Government’s Response Could Mean for Crypto
Significantly, the government’s response could be important for crypto exchanges and other VDA businesses in India. If the government reveals plans to implement stronger crypto regulations, it could obviously help exchanges and businesses, giving them clear rules. As the Finance Committee has already consulted major crypto exchanges like Binance, WazirX, and ZebPay, the government’s move could bring more changes to their compliance, taxation, and commitment to customers.
New crypto regulations could also be meaningful for investors. For years, Indian crypto investors have been struggling with a lack of clarity in regulation. If new rules are launched, they could find answers to the basic questions of protection and compliance.
Will India Finally Get Clearer Crypto Rules?
It is important to mention that the government’s response next week could offer some clarity to the country’s crypto regulation. But this may not bring a new regulatory framework immediately. The response will reveal the government’s approach toward crypto regulation, which could define the future of the industry.
Related: India Tightens Crypto Regulation, Expands FATCA and CRS Rules
