India Regulating Cryptocurrency

How is India Regulating Cryptocurrency?

The Financial Stability Board detailed about how its member countries are regulating cryptocurrency assets, who the regulators are, and what is the scope of their oversight?

Most of the Asian countries have more than one government body regulating and monitoring different cryptocurrency aspects. India, among the board’s Asian member countries, is the only one with no mandate to regulate crypto assets directly.

Cryptocurrency Regulations in India

Cryptocurrencies are not legal tender in India; that’s what everyone knows. What not many know is that exchanges are legal in the country.

While exchanges are legal in India, the government has made it very harsh for them to operate. Though there is a lack of clarity over the tax status of the digital currencies, yet the chairman of the Central Board of Direction Taxation has said –

“Anyone making profits from Bitcoin will have to pay taxes on them. Other Income Tax Departmenet sources have suggested that cryptocurrency profits should be taxed as capital gains.”

While technically legal, in 2018, the RBI (Reserve Bank of India) banned banks and any regulated financial institutions which were dealing in cryptocurrencies. The sweeping regulation prohibited trading cryptocurrencies on domestic exchange and gave existing exchanges some time to wind down.

Three Regulators of India

The RBI (Reserve Bank of India), the SEBI (Securities and Exchange Board of India) and the Ministry of Finance regularly attend the FSB (Financial Stability Board) meetings and G20 summits. The Financial Stability Board is an international body which monitors and makes necessary recommendations about the global financial system. It has listed the country’s central bank as the regulator of the Indian cryptocurrency space while clarifying in a report published last Friday –

“The RBI does not have a legal mandate to directly regulate crypto-assets. RBI’s current mandate permits it to assess financial institutions’ exposure to crypto-assets and supervise their operations.”

Within the mandate, the RBI has prohibited financial institutions from dealing in ‘offering services for facilitating any entity or individual in dealing with or settling digital currencies, detailed by the FSB.

The three regulators mentioned above are the eternal part of the panel headed by the Secretary of the Department of Economic Affairs ‘Subhash Chandra Garg,’ tasked with drafting the nation’s cryptocurrency regulation.

As per the government, the panel is in the final stages of deliberations. India’s cryptocurrency regulation was anticipated to be presented to the nation’s supreme court on March 29th, but the court discontinued without addressing the matter until July.