The Government of India Plans to Implement Crypto Measures This Year

The Government of India Plans to Implement Crypto Measures This Year

The Economic Affairs Secretary, Government of India, Ajay Seth, has revealed plans for the introduction of "measures around crypto" in the current financial year. However, the Union Finance Minister, Nirmala Sitharaman, said cryptocurrency regulation will be discussed in her upcoming G20 meeting of finance ministers and central bank governors.

"Measures Around Crypto" on the Cards

The Economic Affairs Secretary in the government of India, Ajay Seth, reportedly announced at a post-budget press conference in Mumbai on Saturday that India will introduce "measures around crypto" in the current financial year.

"The technology of crypto assets like blockchain and others can be used, but its use in the financial sector can have several risks," he said. Adding:

"In the course of this year, measures around crypto will be brought out."

Seth further added, "In India, nobody is talking about using crypto as a currency. The risks are with using it as a token."

The government of India has been working on crypto legislation for several years. A draft bill was presented in 2019 but it was never taken up in the parliament for discussion.

India is Seeking Global Consensus for Crypto Legislation

The Union Finance Minister of India, Nirmala Sitharaman, reportedly stated in a post-budget interview with Network18 Group on Friday that she will be looking at developing a global standard operating procedure (SOP) for regulating crypto assets in the upcoming G20 meeting. The first meeting of the G20 finance ministers and central bank governors under India’s presidency is scheduled to be held on February 24–25 in Bengaluru.

Sitharaman said:

"We will be looking at global SOP for regulating crypto assets while recognizing the central bank as the authority for issuing cryptocurrencies."

"The rest of the assets are using very useful financial technologies. Even those have to be discussed because regulations cannot be done by one country singularly; it has to be a collective action because technology doesn’t brook any borders," the finance minister explained.

During her budget speech last week, Sitharaman did not mention crypto assets. However, this year’s Finance Bill included new tax penalties relating to crypto tax deducted at source (TDS). The Economic Survey 2022–23 also highlighted the need for "a global approach to crypto regulation."

The Reserve Bank of India (RBI) has repeatedly recommended banning cryptocurrencies like bitcoin and ether. The central bank has underlined that crypto could undermine the authority of the central bank. RBI Governor Shaktikanta Das recently said:

"If crypto is allowed in India, the RBI will lose control over monitoring transactions." Crypto, masquerading as a financial asset, is a completely misplaced argument."

The Indian central bank governor has also warned that crypto could lead to the next financial crisis if it is not banned. Meanwhile, the RBI is currently piloting its central bank digital currency (CBDC), the digital rupee. A wholesale digital rupee pilot was launched in November last year, while a retail pilot began in December.

Do you think India will introduce measures around crypto this year? Please post your comments.