There needed to be a global consensus reached on cryptocurrencies and India would look at regulations enforced in other countries before deciding how it would regulate, Economic Affairs Secretary Ajay Seth said. He added that inputs from various stakeholders and institutions, including the World Bank and the IMF, have been incorporated in the consultation paper which will be released soon.
"We have consulted not just the domestic institutional stakeholders but also organisations like the World Bank and the IMF. So, we hope that we will soon be in a position to finalise our consultation paper," he said while underlining the need for a global response to deal with issues concerning cryptocurrencies as these operate in the virtual world.
He said that India has also started work on some sort of global regulations. "Countries which have prohibited, they can't succuss unless there is a global consensus around that. There has to be a broad framework of participation. Digital assets, whatever way we want to deal with those assets, there has to be a broad framework on which all economies have to be together. No country can choose to either of the position. We need a global consensus on crypto regulation," Seth said.
In Union Budget presented earlier this year, Finance Minister Nirmala Sitharaman had introduced a tax on trading in cryptocurrencies and related assets like non-fungible tokens (NFTs) at a flat 30 per cent and one per cent of tax will be deducted at source (TDS) when any such transaction takes place.
There are an estimated 15 million to 20 million crypto investors in India, with total crypto holdings of around USD 5.34 billion. No official data is available on the size of the Indian crypto market.
Meanwhile, Kunal Jagdale, founder, BitsAir Exchange, said that the government is likely to put the consultation paper on the table in August and "we are waiting for more clarity from the horse's mouth itself".
"We are expecting the government to look after the industry and nurture it as India has the potential to become a global crypto super power," Jumal said.
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