India Needs Global Collaboration to Decide on the Future of Crypto, Finance Minister Says

Indian Finance Minister Nirmala Sitharaman has called for global cooperation on cryptocurrencies, assessing the pros and cons to form a common standard and taxonomy.

Answering a question about cryptocurrency in the Lok Sabha, the lower house of the Indian parliament, Sitharaman said the Indian central bank had advised the government to ban the use of cryptocurrencies as it poses a risk to financial stability. However, the government is looking for a global approach. She said:

“Any regulation or prohibition legislation can only be effective after significant international cooperation in evaluating the risks and benefits and the evolution of common taxonomy and standards.”

She also reiterated that the Indian central bank’s stance on the value of crypto is based on speculation. She added that “the value of fiat currencies is anchored by monetary policy and their status as legal tender. However, the value of cryptocurrencies rests solely on the speculations and expectations of high returns that are not well anchored.”

Reserve Bank of India (RBI), India’s central bank, has maintained an anti-crypto stance since 2013, issuing multiple advisories against investments in digital assets and even banning banks from providing services to crypto firms in 2018. eventually undone after a Supreme Court ruling in 2020.

While the Indian government has yet to decide whether to proceed with a ban or regulate the nascent crypto sector, the government has been relatively swift in proposing and implementing two crypto tax laws that have wreaked havoc on the nascent crypto industry.

Related: The Legal Implications of the Indian Tax on Crypto Transactions

At the January parliamentary meeting, the finance minister announced a 30% tax on unrealized gains and a 1% tax deduction at source (TDS). The laws were heavily inspired by the country’s gambling and gambling laws, resulting in an immediate drop in trading volume on exchanges just weeks after the new 30% tax went into effect.

Trading volumes and trading interests continued to decline after 1% TDS came into effect on July 1. Many thriving crypto unicorns hoping for a positive regulatory approach have begun to shift their bases to crypto-friendly legislation, such as Dubai and Singapore.