Indian Minister of State: Cryptocurrencies are currently unregulated in India

According to foreign media economictimes.indiatimes, Indian Minister of State Pankaj Chaudhary informed the Rajya Sabha of the Federal House of India on Tuesday that the government has no plans to introduce cryptocurrencies. In his written reply, he said that currently cryptocurrencies are not regulated in India.

Pankaj Chaudhary further stated that RBI [Reserve Bank of India] does not issue cryptocurrencies. Traditional banknotes are legal tender issued by the Reserve Bank of India under the provisions of the Reserve Bank of India Act 1994. The digital version of traditional paper money is called central bank digital currency (CBDC).

Furthermore, he said in a separate reply that the RBI is currently working on a phased implementation strategy to introduce a CBDC and examine use cases that can be implemented with little or no disruption. The introduction of a CBDC has the potential to bring significant benefits such as reduced reliance on cash, higher seigniorage due to lower transaction costs, etc.

In fact, back in November last year, Chaudhary pointed out that cryptocurrencies are not regulated in India. The RBI [Reserve Bank of India] has issued its circular dated 31 May 2021 advising its regulated entities to continue to conduct customer due diligence procedures in accordance with regulatory requirements on Know Your Customer (KYC), Anti-Money Laundering (AML) standards, and combat terrorism Fundamentalist Financing (CFT) and regulated entities’ obligations under the Anti-Money Laundering Act 2002 (PMLA), while ensuring compliance with the Foreign Exchange Management Act (FEMA) regulations for overseas remittances. It was also mentioned that the government does not collect information on cryptocurrency transactions.

However, in March, Indian Finance Minister Nirmala Sitharaman said the government would discuss its stance on cryptocurrencies after completing an ongoing consultation process. Many Indians see a future in cryptocurrencies, while the government sees revenue opportunities in the asset class, Sitharaman said. The Finance Minister’s announcement in February of a 30 percent tax on all crypto income raised hopes of legalizing crypto in the country. However, both the RBI and the government have clarified that taxation does not necessarily mean legalisation, leaving the industry eager for clarification.

Although the Indian government announced a 30 percent tax on cryptocurrency transactions this year, it has yet to make a final decision on whether to ban virtual currencies or regulate them. Polygon co-founder Sandeep Nailwal said in an interview that India’s indecision on whether to embrace digital assets has led thousands of developers, investors and entrepreneurs to leave for more regulatory friendly places such as Dubai, Mauritius and so on.

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