The crypto industry’s popularity is on the rise all around the world. While many countries like Panama are making moves to encourage crypto adoption, India is one of the many that aren’t crypto-friendly yet. The Indian government’s decision to raise crypto income tax at a rate of 30% was a move that market participants widely criticized as being unjust and potentially harmful to the country’s local digital asset business.
However, the Indian government is striving to provide some clarity on the subject now. A consultation paper produced in collaboration with the International Monetary Fund (IMF) and the World Bank is nearing completion at India’s Department of Economic Affairs. The report will outline India’s position on cryptocurrencies.
According to Economic Affairs Secretary Ajay Seth, it would bolster the country’s regulatory push. He said, “that digital asset has a comprehensive framework on which all economies must be together, regardless of how we want to deal with them.”
In that situation, India seems hesitant to impose an outright ban on cryptocurrencies unless there is a global consensus supporting it. Instead, the document might summarize India’s vision of a potential worldwide agreement and where India fits into that picture.
Seth said the International Monetary Fund, the World Bank, and domestic players contributed to the document at the country’s “ICONIC Week” event, which the Ministry of Labor and Employment organized. The consultation document on cryptocurrency would be proposed to the federal government. The document’s approval might move the country closer to an international regulatory agreement on digital assets.
Given India’s long-standing skepticism of cryptocurrencies, it isn’t easy to imagine much more positive news coming out of the country anytime soon. However, the country’s central bank has warned of the possible dollarization of the Indian economy through cryptocurrency.
The decline of the crypto market
Since November 2021, when it peaked at $3 trillion, the crypto market has lost more than half its value. The fall of the fourth-largest cryptocurrency LUNA and its stablecoin UST in the previous month shocked the crypto world. The tragedy took $500 billion from the market in just four days. Bitcoin, which hit an all-time high of $69,000 in November of last year, plummeted to $26,000 before bouncing back to $30,000.
On Monday, the governor of the Reserve Bank of India (RBI) stated that cryptocurrencies had no intrinsic value. As a rationale for the current crypto market fall, he offered this. According to a media report, the RBI Governor also reminded the public of how he repeatedly warned them about cryptocurrencies throughout the discussion over whether India should adopt, regulate, or ban digital assets.
The Indian government levied income tax on crypto transactions and TDS in its annual budget for 2022-23. This decision conveyed that the government is willing to accept digital currency first. However, the government then stressed that it is not banning or regulating the cryptocurrency industry. They conveyed that investors should be conscious of the risks of investing in unregulated assets. The reason is no legal redress in the event of fraud.
To conclude, there are a lot of apprehensions encircling this emerging industry’s future in India. However, the Indian government is finally working on a national cryptocurrency framework. The crypto consultation paper’s specifics have not been revealed. But it still seems that cryptocurrency market bulls will have to wait longer for some positive news.