The cryptocurrency landscape in India has been the subject of intense scrutiny and speculation in recent years. The latest developments suggest that the Indian government is preparing to release a comprehensive discussion paper that outlines its policy position on cryptocurrencies.

This decision follows an interview with Economic Affairs Secretary Ajay Seth.Seth’s interview shed light on the government’s strategy, emphasising the importance of engaging with relevant stakeholders to formulate a well-rounded policy on cryptocurrencies.

Rather than immediately committing to regulating cryptocurrencies through a single, broad legislation, the government is seeking to achieve consensus among stakeholders.

This approach reflects a deliberate and inclusive process of gathering a wide range of perspectives and insights from various participants in the cryptocurrency ecosystem.

The inter-ministerial group spearheading this effort includes key bodies such as India’s central bank, the Reserve Bank of India (RBI), and the market regulator, the Securities and Exchange Board of India (SEBI).

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Notably, the RBI has expressed reluctance to legitimise cryptocurrencies and stablecoins, instead advocating for their prohibition due to concerns about potential risks to macroeconomic stability.

In contrast, SEBI has shown openness to regulating digital assets, suggesting that the oversight of cryptocurrency trading should involve multiple authorities.

India’s current regulatory framework for cryptocurrencies lacks a comprehensive legislative structure but has implemented substantial taxes on the sector.

Additionally, the country has introduced requirements for crypto entities to register with the Financial Intelligence Unit (FIU-IND) to ensure compliance with global anti-money laundering (AML) and counter-terrorism financing standards outlined by organisations such as the Financial Action Task Force (FATF).

These measures represent a proactive shift towards strengthening the credibility and integrity of the cryptocurrency industry within India.

Economic Affairs Secretary Ajay Seth emphasised that the regulation of cryptocurrencies in India currently focuses primarily on AML and Electronic Funds Transfer (EFT), indicating that the scope should not extend beyond these domains.

The forthcoming discussion paper is expected to address critical questions, such as the potential expansion of the regulatory remit and the broad policy position towards cryptocurrencies.

Through this consultative process, the Indian government aims to foster well-informed discussions and gather a diverse range of perspectives to shape its approach to cryptocurrency regulation.

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Looking ahead, Seth indicated that India would closely examine the positions of global leaders on acceptable cryptocurrency rule frameworks to inform its own stance, with a decision expected in the coming months.

This highlights India’s commitment to aligning its approach with international best practices and initiating consensus-based discussions, particularly in light of its presidency of the Group of 20.

The nation’s focus on a collaborative and informed approach to framing cryptocurrency regulations underscores its intent to navigate this evolving landscape thoughtfully and responsibly.