India is planning to tighten regulation cryptocurrency According to two sources familiar with the discussion, the government is unlikely to follow through on the earlier plan of banning private digital coins, though investors are unlikely to hold them.
Instead, it may allow only those that have been pre-approved by the government to be traded on exchanges – a deliberately cumbersome process, said sources, who asked not to be named as discussed. , they are private.
“Only when a coin has been approved by the government, can it be traded, otherwise the possession or trade of it may attract a fine,” the first source said.
The government aims to introduce and pass a cryptocurrency law in a parliamentary session that begins this month.
Such a pre-verification approach would create hurdles for the thousands of peer-to-peer currencies that thrive when outside the scope of regulatory scrutiny.
On Thursday, Indian Prime Minister Narendra Modi said that all democratic countries should work together to ensure that cryptocurrencies “do not fall into the wrong hands, which could spoil our youth” – his first public remarks on the subject. .
Earlier this year, the government considered criminalizing the possession, issuance, mining, trading and transfer of crypto-assets.
Its stance has changed since then – but only slightly, according to two sources, who said hefty capital gains and other taxes could be imposed to discourage cryptocurrency trading.
A senior government source said that investors “will have to pay more than 40% on any crypto gains so far”, with additional goods and services sales tax, and securities transaction tax, levied on top of any capital gains tax. Is.
The finance ministry did not respond to an email seeking comment.
Last week, Modi chaired a meeting to discuss the future of cryptocurrencies, amid concerns that unregulated crypto markets could become avenues for money laundering and terror financing, sources said separately on Saturday.
The new rules are likely to discourage marketing and advertising of cryptocurrencies, reducing their attractiveness to retail investors, said an industry source who was part of a separate parliamentary panel discussion held on Monday.
Two sources said that the government is looking to classify crypto as an asset class, as demanded by crypto exchanges, and not as a currency.
But the senior government official told Reuters the plan is to ban private crypto-assets, while paving the way for a new central bank digital currency (CBDC).
The Reserve Bank of India, which has expressed “serious concerns” about private crypto, is set to launch its CBDC by December.
Bitcoin, the world’s largest cryptocurrency, is hovering around $60,000 and has more than doubled since the beginning of this year, attracting crowds of local investors.
There is no official data available, but the industry estimates that there are 15-20 million crypto investors in India with total crypto holdings of around 400 billion rupees ($5.39 billion).
China’s state planner and foreign exchange regulator, the National Development and Reform Commission (NDRC), said this week that it would continue to clean up virtual currency mining in the country, which affected cryptocurrency prices.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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