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India will take into account country-specific characteristics and risks before taking any measures on crypto assets, the Finance Ministry said on Tuesday. Players in crypto assets industry say the stand gives hope for reasonable regulatory mechanism.
In a written answer in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the New Delhi Leaders’ Declaration welcomed the International Monetary Fund (IMF) - Financial Stability Board (FSB) Synthesis Paper including a Roadmap that supports a comprehensive policy and regulatory framework on crypto assets taking into account the risks specific to the emerging markets and developing economies (EMDEs).
The IMF-FSB synthesis paper was presented during the Leaders’ Summit and provides valuable guidance, to not just the G-20 but also the non-G20 jurisdictions, in moving forward with clearer policies on crypto assets. The paper also emphasises that EMDEs face higher risks from crypto assets.
More flexibility
Further, the Minister said the paper gives more flexibility to the EMDEs who may take additional targeted measures depending on their country-specific characteristics such as size of the economy and financial system, regulatory priorities, institutional quality and capacity, and level of financial integration into the global economy.
Accordingly, “all jurisdictions, including India, are expected to evaluate the country specific characteristics and risks in order to reach an appropriate consideration of any necessary measures on crypto assets,” he said.
Post leadership summit, G20 Finance Minister-Central Bank Governor (FMCBG) meeting at Maracas (Morocco) under India’s Presidency adopted a roadmap suggested in the synthesis paper on crypto. “This action-oriented roadmap is essential to achieve our common goals of macro-economic and financial stability and to ensure effective, flexible, and coordinated implementation of the comprehensive policy framework for crypto assets,” Finance Minister Nirmala Sitharaman had said after the meeting.
Chainalysis, a US-based blockchain data platform, in ‘The 2023 Geography of Cryptocurrency Report’, said that India leads the world in grassroots adaptation as measured by Global Crypto Adoption Index, but even more impressively has become the second largest crypto market in the world by raw estimated transaction volume, beating out several wealthier nations. The US leads the table. The report pegged transactions in India at over $260 billion. All this happening despite 30 per cent tax on gains and tax deducted at source at the rate of 1 per cent.
“It is critical for India to develop a robust crypto asset regulatory framework that ring fences the ecosystem from bad actors and unscrupulous incidents, while promoting innovation and providing Indians the opportunity to be a part of this exciting new global emerging tech, and in fact lead this change,” R Venkatesh, SVP & Head of Public Policy at CoinSwitch, said while reiterating his firm’s commitment and offer for unflinching support to the government to create a risk-based regulatory framework for crypto assets in India.
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