India Says ‘No’ to Crypto Legalization, Labels Crypto as a Gambling Tool
In Brief
Indian government officials believe there is no economic “upside” in making cryptocurrency a regulated financial instrument.
Despite India soaring to become the world’s second-largest crypto market, handling $268.9 billion in crypto transactions from July 2022 to July 2023, the Central Bank of India is in no mood to legalize the digital asset.
Three senior Indian government officials expressed reservations about the integration of cryptocurrencies into the country’s economic framework and made clear that there is no economic “upside” in making them regulated financial instruments, as per HT, an Indian English-language daily newspaper.
According to statements, cryptocurrencies pose threats to the stability of Indian economy and carry higher risks for both emerging markets and developed economies. The officials suggest that, at most, treating crypto assets like gambling instruments might be a more suitable approach.
An official involved in the decision-making process asserted that the perspective of the Reserve Bank of India (RBI) – the central bank and regulatory body responsible for regulation of the Indian banking system – on the issue has received validation from the International Monetary Fund-Financial Stability Board Synthesis Paper.
The RBI had initially advocated for a ban, and according to the official, any alternative policy approach must effectively tackle the key concerns raised by the RBI.
Only last month, the Supreme Court, serving as the apex judicial authority of the country, refused to accept a plea that sought explicit guidelines for regulating cryptocurrency trading and mining in the country.
Decoding India’s 2023 Crypto Stance
Despite high tax rates that stand in contrast to global trends, India continues to witness a robust demand for cryptocurrencies. The Indian government imposes a 30% tax on crypto gains and a 1% tax on all transactions.
According to Chainalysis’ 2023 Geography of Cryptocurrency Report, the Central and South Asian region (CSAO) accounts for nearly 20% of global crypto activities. Six countries from the region, including India, Vietnam, the Philippines, Indonesia, Pakistan and Thailand, feature prominently in the Global Crypto Adoption Index.
In August 2023, Indian Prime Minister Narendra Modi issued a call for the establishment of a global regulatory framework for cryptocurrencies. The request was conveyed through a Presidency Note, serving as an influential input for the development of a roadmap aimed at creating a comprehensive global framework for crypto assets.
The note put forth by Prime Minister Modi highlighted that the G20 recognizes the imperative for coordinated efforts and uniform implementation of regulations and guidance across various jurisdictions.
At the recently concluded G20 meetings, leaders endorsed the Financial Stability Board (FSB) recommendations for regulating and supervising crypto assets.
The emphasis on a coordinated global regulatory framework reflects an understanding of the complexities involved in managing risks associated with cryptocurrencies, including those specific to emerging markets and concerns related to money laundering and terror financing. However, the paper also suggested country-specific restrictions, including a complete ban.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
