India has one of the largest crypto economies in the world, but the country is yet to enforce a clear regulatory framework on cryptocurrencies. The minister of finance in India, Nirmala Sitharaman, has suggested that the regulatory uncertainty could progress for a while.
Sitharaman was discussing the 2022-2023 Union Budget at the upper chamber of India’s bicameral parliament, Rajya Sabha.
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Regulatory uncertainty in India
Sitharaman said that she was not going to impose a ban on cryptocurrencies, and neither was she to launch a regulatory framework. She said that the ministry was reviewing the inputs garnered from consultations, after which “banning or not banning will come subsequently.”
The top official also talked about the recently introduced crypto taxation in India. During the Union Budget 2022-2023, the ministry recommended a 30% tax on cryptocurrency transactions. She said that India had the “sovereign right to tax” the revenues derived from cryptocurrency transactions.
According to Sitharaman, charging taxes on cryptocurrency transactions did not constitute to this asset class being legalized. The ability of the government to tax these transactions was different from the action of this asset class being recognized.
Sitharaman’s statements echoed what was said by the head of India’s tax body earlier in the week. The regulator stated that taxing cryptocurrencies did not necessarily mean that this trade was legalized.
The crypto regulatory framework in India has been a topic of discussion in the crypto communities. Towards the end of 2021, there were rumors in the crypto space that India would ban cryptocurrencies during the Winter Session. However, after India imposed a crypto tax in the Union Budget, it calmed down these rumors.
However, with the recent statements shared by Sitharaman and the head of India’s tax body, these rumors could be spiked again, as the threat of a ban is still looming. The bill that sought to address a ban on cryptocurrencies was shelved and it will not be tabled during the current session.
As the country continues to weigh the risks and benefits derived from digital assets, it has been active in developing its central bank digital currency (CBDC). This CBDC will be launched towards the end of 2022 or in 2023.
The uncertainty of crypto regulations in India is similar to the previous situation in Russia. A potential ban on cryptocurrencies was looming in Russia until earlier this week when the country legalized the use of crypto as a currency.
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