India has a rigid cryptocurrency environment, and its stance on the digital currency has been anything but consistent. The laws around it are ever-changing. And people who are brave enough to get past the rules and regulations have to face heavy taxes. However, this is reportedly set to change soon. The government is rethinking its current approach to cryptocurrency trade and investment in India, according to a report by Reuters. Reportedly, this purported change is primarily because of the global shift in the approach toward cryptocurrency –– specifically in the US, where Donald Trump has been making some pro-crypto announcements. In fact, just ahead of his swearing in as the US president, Trump launched his own meme coin in the US, which eventually also led to Bitcoin hitting an all-time high of $100,000.
“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of usage, acceptance, and the importance of crypto assets. In that stride, we are reviewing the discussion paper once again,” Reuters reports Ajay Seth, India’s economic affairs secretary, as saying.
In the US, Trump has recently directed the establishment of a cryptocurrency working group. The proposed group is meant to suggest new digital asset regulations and aid in creating a national cryptocurrency reserve.
Meanwhile, in India, regulatory bodies have been quite strict. In December 2023, the Financial Intelligence Unit (FIU) in India issued show-cause notices to 9 offshore crypto exchanges, including Binance and Kucoin, for non-compliance with local regulations. The FIU also requested the Ministry of Electronics and Information Technology to block these platforms’ URLs within India.
In June 2024, Binance, which is the world’s largest crypto exchange, faced a hefty fine of Rs 188.2 million in India. This was just a month after Binance registered with the FIU in an attempt to resume its operations in the country. The fine, according to FIU, was due to violations of the Prevention of Money Laundering Act (PMLA), 2002, under which virtual digital asset service providers (VDA SPs) are required to register as ‘Reporting Entities’ and comply with anti-money laundering protocols.
In 2023, former RBI Governor Shaktikanta Das also represented a critical stand against cryptocurrency in India. “Crypto should be banned, given its lack of underlying value. It’s a form of gambling, nothing more than 100 per cent speculation,” Das said at the Business Today Banking and Economy Summit.
While there have been calls for a multi-regulatory framework for crypto in India, the report on the shift in the government’s stance regarding the digital currency, brings hope for traders in India. It will be interesting to see how the government now balances the external pressure from global developments and the internal squabble on regulation around cryptocurrency. Let’s hope the delay in the discussion paper on cryptocurrency, which was supposed to be released in September 2024, will only bring good news for crypto traders in the country.
