India’s Finance Minister Nirmala Sitharaman presented the interim budget for the fiscal year 2023 on February 1, but did not mention anything about crypto regulation or taxation. This comes as a surprise, as India is currently the president of the G20, the group of the world’s 20 largest economies, which has been working on a common global framework for crypto regulation.
India’s Ambiguous Stance on Crypto
India has a large and growing crypto market, with over 10 million investors and over $1 billion in assets, according to industry estimates. However, the legal status and regulation of crypto in India has been unclear and uncertain for a long time.
In 2018, the Reserve Bank of India (RBI), the country’s central bank, banned banks and other regulated entities from dealing with crypto, effectively cutting off the access and liquidity of the crypto industry. However, in 2020, the Supreme Court of India overturned the RBI’s ban, ruling that it was unconstitutional and disproportionate.
Since then, the crypto industry and investors have been waiting for the government to provide clarity and certainty on the regulation and taxation of crypto. However, the government has been sending mixed signals and delaying the process.
On one hand, the government has been in talks with the crypto industry and has taken some positive steps, such as setting up an inter-ministerial committee to study the issue, and forming a panel of experts to advise the RBI on digital currency. On the other hand, the government has also been proposing and drafting bills that could ban or restrict crypto, and imposing heavy taxes on crypto gains.
India’s Role in the G20’s Crypto Framework
India assumed the presidency of the G20 on December 1, 2023, giving it the responsibility and opportunity to shape the group’s agenda and priorities. One of the key issues that the G20 has been working on is the regulation of crypto, which has been growing in popularity and impact across the world.
The G20 has recognized that crypto poses various challenges and risks, such as money laundering, terrorism financing, tax evasion, consumer protection, and financial stability. However, the G20 has also acknowledged that crypto offers various benefits and opportunities, such as innovation, inclusion, efficiency, and resilience.
Therefore, the G20 has been striving to develop a common global framework for crypto regulation, based on the principles of cooperation, coordination, and consistency. The G20 has been working with various international organizations and bodies, such as the Financial Action Task Force (FATF), the International Monetary Fund (IMF), and the Financial Stability Board (FSB), to set the standards and guidelines for crypto regulation.
India, as the G20 president, has been playing an active and influential role in the G20’s crypto framework, by hosting and participating in various meetings, seminars, and consultations. India has also been aligning its views and interests with the G20’s vision and objectives, by emphasizing the need for a balanced and harmonized approach to crypto regulation.
India’s Future Prospects on Crypto
India’s budget for 2023 has skipped any update on crypto regulation or taxation, despite the expectations and demands of the crypto industry and investors. This has raised questions and concerns about India’s commitment and direction on crypto, and its compatibility and compliance with the G20’s crypto framework.
However, India’s Finance Minister Nirmala Sitharaman has assured that India is not ignoring or avoiding crypto, and that it is still working on its own position and policy on crypto, after considering the global developments and perspectives. She has also stated that India is looking for a global standard operating procedure (SOP) for regulating crypto, which will be discussed and agreed upon in the upcoming G20 meeting of finance ministers and central bank governors later this month.
Therefore, India’s future prospects on crypto depend on how it balances and reconciles its domestic and international interests and obligations, and how it engages and collaborates with the G20 and other stakeholders, to create a conducive and consistent environment for crypto regulation and innovation.
