In a report by Todayq News on September 10, 2023, the finance minister Nirmala Sitharaman discussed the regulatory framework for cryptocurrencies at the G20 summit. They also encouraged the members to seek more clarity on the “synthesis paper” published by the FSB and IMF. However, there has been no progress regarding the cryptocurrency framework, and further discussions will take place from October 9 to 15, 2023.
Currently, India is in the process of developing a crypto regulatory framework based on the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB), which is expected to become law in the next 5-6 months. This framework is based on recommendations from the IMF and FSB and emphasizes a global approach. Here are the key points of India’s approach:
Advanced KYC Requirements: Crypto companies will need to implement robust Know Your Customer (KYC) procedures, including compliance with the Foreign Account Tax Compliance Act (FATCA) and anti-money laundering standards.
Real-Time Audits: Crypto platforms will be required to conduct real-time Proof-of-Reserve audits to provide transparency to regulators.
Uniform Taxation: India aims to establish a consistent taxation policy for cryptocurrencies across the country.
Authorized Status: Crypto exchanges may gain a status similar to authorized dealers, similar to banks, under the guidance of the Reserve Bank of India (RBI).
Key Personnel: Key roles like Money Laundering Reporting Officers (MLRO) will be mandatory for crypto platforms.
India, along with other G20 nations, supports the IMF-FSB recommendations, which advocate for regulating the crypto market rather than imposing a complete ban. The government recognizes that banning cryptocurrencies is not a practical option, especially when other countries are not pursuing such bans.
Earlier this year, several countries, including the UK and South Korea, passed crypto regulatory bills to safeguard the country’s investors and boost their economies. The UK’s Financial Services and Markets Bill allows the regulation of financial services and digital assets to attract US crypto companies, while South Korea’s “Virtual Asset User Protection” focuses on safeguarding user assets, enhancing transparency, and investor protection in the crypto market.
Currently, India lacks specific crypto regulations, but it introduced a 30% tax on crypto gains in 2022. The Finance Ministry is actively working on comprehensive regulations based on the IMF-FSB recommendations, which are seen as a positive development for the crypto industry in the country.