It is believed that India will attempt to finish crafting its regulatory framework in the next six months.
India has shifted gears from contemplating a cryptocurrency ban to working on a well-defined legislative framework.
In collaboration with international bodies like the International Monetary Fund (IMF) and the Financial Stability Board (FSB), the country aims to finalize its crypto legislation within six months.
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Sidharth Sogani, the CEO of Crebaco, a firm specializing in blockchain analytics and consulting, has offered insights into the government's new outlook. According to Sogani, the Indian authorities are developing a five-point legislative approach incorporating global perspectives, especially on matters like the taxation of cryptocurrencies.
This comes after the IMF and FSB provided joint recommendations for crypto regulations, which were positively received at the recently concluded G20 summit, where India was the president.
The key components of India's alleged five-point framework for crypto regulation include:
- Implementing sophisticated Know Your Customer (KYC) procedures that align with the Foreign Account Tax Compliance Act and Anti-Money Laundering protocols.
- Mandating crypto platforms to provide real-time proof-of-reserve audits.
- Establishing a consistent taxation policy for crypto transactions.
- Potential recognition of crypto exchanges as authorized financial dealers under the guidance of the Reserve Bank of India (RBI).
- Requiring specific roles like a Money Laundering Reporting Officer to be established within crypto platforms.
Regarding India's plans to regulate the crypto ecosystem, Sogani stated:
Regulations are inevitable; this ecosystem has grown substantially strong without regulations. Just imagine how well would it grow with proper regulations in place. Also, regulated markets reduce the risks of scams and illicit activities.
The change in tone from the Indian government comes after repeated calls for a globally coordinated approach to crypto regulation, a sentiment also voiced by Prime Minister Narendra Modi at the G20 summit.
A finance ministry executive validated this, stating that the IMF-FSB recommendations offer a solid basis for India to craft its own rules, stressing that banning cryptocurrencies is now out of the question.
The Indian government's willingness to abandon the idea of a blanket crypto ban signifies a maturation in its policy stance. As it works on a nuanced regulatory framework inspired by global best practices, India looks more promising than ever for crypto investors and businesses.
During India's presidency, the G20 has also decided to create a crypto regulatory framework.
