India’s finance ministry said there was no proposed law governing the sale and purchase of digital assets. However, it noted that virtual digital asset service providers (VDASPs) were reporting entities for anti-money laundering (AML) purposes. The messages were mixed as the G20 wants to see action.
Pankaj Chaudhary, Minister of State in the Ministry of Finance, shared this information in a written reply to a question in the lower house, Lok Sabha, posed by Chief Executive Officer Harish Balayogi.
We found that Mr. Chaudhary’s wording was very specific: “regulate the sales and purchases of virtual digital assets.” This may not cover the regulation of service providers or the custody of digital assets.
Apart from questions on planned regulation, Mr Balayogi also sought figures on the total value of digital assets held by Indians and the number of companies and exchanges involved in the sector. Mr Chaudhary said the government does not have this information as the sector is unregulated.
He, however, pointed out that there is a G20 roadmap on crypto assets, adopted during India’s G20 presidency last year. “All jurisdictions, including India, need to assess the country-specific characteristics and risks and work with the standard-setting bodies and the G20 to appropriately consider all necessary measures for crypto assets,” Chaudhary said.
Recommendations of the Financial Stability Board
The reason for the conflicting messages is that the finance ministry has argued that it does not have data because the sector is unregulated. If India is to comply with the G20 roadmap, it needs data. And it will probably have to introduce regulations.
The Financial Stability Board (FSB) has issued nine high-level recommendations for the regulation of crypto-assets, which have been incorporated into the G20 roadmap. The sixth recommendation concerns data collection, recording and reporting.
Most of the FSB’s nine recommendations concern crypto-asset issuers and service providers:
- Regulatory powers and tools (to regulate, supervise, monitor crypto markets)
- General regulatory framework
- Cross-border cooperation, coordination and information sharing
- Governance
- Risk management
- Collection, recording and communication of data
- Disclosures
- Addressing financial stability risks arising from interconnections and interdependencies
- Comprehensive regulation of multi-functional crypto-asset service providers.
Meanwhile, in 2021, a cryptocurrency bill was planned but it did not move forward. The Reserve Bank of India had restricted the cryptocurrency sector by not allowing banks to provide services to cryptocurrency exchanges. This changed in 2020 when the Supreme Court overturned the central bank’s ban.
According to Chainalysis’ Global Crypto Adoption Index, India ranks number one overall and in all categories except P2P transfers where it ranks fifth.
Gadgets 360 Ledger Insights was the first to report the story. Ledger Insights directly obtained a copy of the parliamentary question and answer.
