The center may not be in a hurry to finalize a regulatory framework for cryptocurrencies, as this would mean labeling them as legal security – or a call for tenders – which could lead to “ dollarization ” of the Indian economy, a senior government official declared to MoneyControl subject to anonymity, showing the fact that most cryptocurrencies are dedicated to dollars.
“There is no global clarity on how to regulate cryptocurrency and cryptographic assets. Unless we know how other countries are progressing, whether or not they recognize them as a legal … We cannot take unilateral measures,” said the official.
Similar concerns were raised by the RBI banking regulator in 2022, when, while informing the parliamentary committee on the permanence of finance, senior officials of the Central Bank said that “ almost all ” The cryptocurrencies are labeled in dollars and issued by private foreign entities. This could possibly lead to the dollarization of part of the economy, which will be “against the sovereign interest of the country,” said the official.
RBI officials also said that cryptocurrencies could be a means of exchange and replace the rupe in financial transactions, both at the national level and through the border. “… It could undermine the RBI’s ability to regulate the flow of money in the system,” the officials had informed the panel.
According to Coingecko – A Crypto data aggregator platform – the global market capitalization of cryptocurrency is today 3.45 billions of dollars and increased by 28.2% compared to a year ago.
On Friday, the Governor of RBI, Sanjay Malhotra, told journalists that there was no new development with regard to the crypto, adding that a government committee examined the policy concerning the asset. “… We are concerned about crypto because it can hinder financial stability and monetary policy,” said Governor Malhotra.
The remarks follow the observation of the Supreme Court last month, where he urged the center to formulate a policy of “clear cut” to govern the use of cryptocurrencies in India.
According to reports, the central government is currently working on a discussion document – likely to be driftwood this month – to seek stakeholder opinions on the regulation of cryptographic assets before deciding on its formal position. A committee made up of leaders of RBI, SEBI and the Ministry of Finance examines the global cryptography regulations, reports.
Global cryptocurrency regulatory frameworks are gradually taking shape. In the United States, the dry approval of Bitcoin negotiated funds marked an important step last year to the introduction of cryptographic assets in the consumer financial system. In the United Kingdom, cryptographic companies are required to register with the Financial Conduct Authority (FCA) and to comply with anti-flowering regulations.
India’s approach to cryptography regulation has remained prudent and fragmented. Although the government has taken measures such as the taxation of a 30% tax on crypto gains and a 1% tax (TDS) at all transactions, a full regulatory framework is still underway.
Experts have said that cryptographic assets need a global regulatory framework so that each jurisdiction can operationalize the detailed local requirements aligned with global principles, in order to mitigate the risk of money laundering. “This cannot be a single effort of jurisdiction and must be a global effort, if not surveillance would be ineffective,” said Vivek Iyer, partner and risk leader in financial services, Grant Thornton Bharat. FEMA (FEMA’s Women’s Law. FEMA imposes controls on change changes and capital flows to protect economic stability.
