Raghav Chadhamember of the upper house of the Indian Parliament, urged the government to establish a regulatory framework for cryptocurrencies and stablecoins in the country.
India’s crypto policyies under the scanner
In a speech to Parliament on Monday, Chadha highlighted what he saw as the paradox of taxing cryptocurrency gains at 30% without legal recognition, investor protections or an anti-money laundering framework.
“India taxes VDAs (virtual digital assets) as if they were legal. But regulates them as if they were illegal,” Chadha said.
Can clear regulations unlock billions?
India imposes a flat tax of 30% on income from the transfer of virtual digital assets, including cryptocurrencies and non-fungible tokens. The 30% tax applies regardless of holding period or income level. Additionally, a 1% tax is deducted on all transfers, including sales.
An analysis by KoinXa cryptocurrency tax accounting platform, found that 72.66% of India’s cryptocurrency trading volume, worth around $5.60 billion, occurred on offshore platforms. Chadha also referred to these figures, adding that unclear regulations have forced up to 180 cryptocurrency startups to set up operations abroad.
The lawmaker highlighted the need for a “clear national regulatory sandbox” that would grant cryptocurrencies “asset class status” in the country. He said it would add billions of dollars in annual tax revenue to the government.
“Let’s not fear innovation, let’s regulate it. Ban is not protection, regulation is protection,” Chadha said.
India’s Finance Ministry did not immediately respond to Benzinga’s request for comment.
India says no to stablecoins
The Indian government has postponed discussions on a proposed cryptocurrency bill first announced in 2021. Noting the delay, the country’s Supreme Court stopped the government, calling the lack of clear guidelines on cryptocurrency “unfortunate.”
In December, T.Rabi Sankardeputy governor of the RBI, has ruled out the need for stablecoins in the country as they do not fit the definition of “sovereign currencies”, as reported by The Hindu.
Sankar previously noted that most stablecoins are pegged to the US dollar or European currencies and in a country like India, they could lead to dollarization and eclipse the use of the Indian rupee.
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