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India is working on a crypto regulatory framework that is based on the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB) and could result in legislation within the next five to six months. Sidharth Sogani, the CEO of Crebaco, a company working with government agencies and ministries, stated that the Indian government is working on a five-point crypto legislative framework with a global approach.
India’s Five-Point Crypto Legislation
India recently concluded the G20 summit with several important economic announcements, but the most notable decision for the crypto community came in the form of IMF-FSB joint recommendations for crypto asset regulations that were welcomed by India and other G20 countries. The crypto asset recommendations call for regulation of the crypto market instead of a blanket ban. The IMF-FSB recommendations were presented as a set of regulatory guidelines and suggestions that G20 countries could work on to formulate independent but collaborative crypto asset legislation.
Speaking about the five-law framework, Sogani, the CEO of Crebaco, stated that the government is focusing on the following points:
- Creation of advanced Know Your Customer (KYC) requirements covering Foreign Account Tax Compliance Act and existing Anti-Money Laundering standards for crypto companies.
- Real-time regulatory access to proof-of-reserves audits for crypto platforms.
- Uniform taxation policy across countries.
- Possibility for crypto exchanges to obtain the same status as authorized vendors (similar to banks) under the guidelines of the Reserve Bank of India (RBI).
- Mandatory key positions such as Anti-Money Laundering Reporting Officer for crypto platforms.
Sogani acknowledged that banning the crypto market in advanced countries would be futile and that several countries are moving towards a regulatory approach instead of a blanket ban. While countries like the United States and Europe already have some specific crypto regulations, India has opted for a taxation route. Sogani continued:
“Regulations are inevitable; this ecosystem has grown quite strongly even without regulations. Just imagine how well it can grow with appropriate regulations. Additionally, regulated markets reduce the risks of fraud and illegal activities.”
Formulating the Regulations
India has been advocating for a global approach to crypto regulations for some time, and Prime Minister Narendra Modi reiterated the call during the recently concluded G20 summit. An official from the Ministry of Finance confirmed receiving the IMF-FSB crypto recommendations and stated that they will focus on formulating regulations related to them in the coming months. The Ministry of Finance official said:
“We have been provided with a good framework to decide our own path. The groundwork is ready, and in the next few months, we will decide how far we want to progress and then make a decision.”
India currently does not have any specific crypto regulations, but the country imposed a 30% tax on crypto gains in 2022. However, the shared crypto recommendations and the assurance from the Ministry of Finance that a crypto framework can evolve into robust regulation in the next few months are optimistic signs for the crypto industry in the country.