India to develop framework on digital currencies before Budget FY22
The Government of India is currently developing a legal framework to regulate the digital asset market, which can be announced as early as February 2022, Indian news media Business Today reported on Tuesday.
According to people familiar with the matter, cryptocurrencies would be classified as ‘assets’ and would be taxed and regulated accordingly.
The Finance Ministry and the Reserve Bank of India (RBI) have been working together on building a conceptual framework.
The Finance Ministry official cited fraud behind the need to adopt regulations. They told Business Today Television:
“What should not happen tomorrow is that if I start a personal digital currency, and after good marketing everybody buys it and once it has appreciated, I run away since I am a private player! Everybody has actually bought that currency by using other assets. Government needs to look at regulation in order to avoid the above.”
Currently, there is no legal framework to control the issuance, use, and transactions of cryptocurrencies. A draft bill banning cryptocurrencies was proposed by the Finance Ministry committee in 2019 but was later discarded.
In addition, India’s central bank, The Reserve Bank of India, clarified in May that it has no intentions to ban cryptocurrencies, and instead, would build a framework to regulate them.
Cryptocurrency trading and holding have become increasingly popular in India. A report by blockchain analytics firm Chainalysis revealed that investment in cryptocurrencies in India has increased from $ 200 million to nearly $ 40 billion over the past year.
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