Regulators in India are set to publish a discussion paper on the nation’s stance on cryptocurrencies by the end of 2024.

Ajay Seth, the Secretary of Economic Affairs, stated that the discussion paper would clarify the government’s perspective on cryptocurrencies. The paper aims to gather comments from relevant stakeholders to shape the crypto policy in India, one of the world’s most populous countries.

“In India, cryptocurrencies are being regulated from the perspective of AML and EFT alone. Regulation starts and ends there, it cannot be beyond that, so should the remit be more? What should be the policy stance? All that will come out in the discussion paper.”

An inter-ministerial group, including multiple regulators, is drafting the discussion paper. This group is reportedly exploring a broader policy for cryptocurrencies.

The discussion paper is expected to be released before September. The group includes the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

The RBI has historically opposed allowing cryptocurrencies in India, citing risks to economic stability. Consequently, the central bank has proposed a complete ban on cryptocurrencies instead of regulating them.

Meanwhile, SEBI has shown a more favorable stance. In May 2024, SEBI suggested that the nation should adopt a multi-agency approach to crypto legislation. The suggestions included plans to delegate oversight to various agencies like the Insurance Regulatory and Development Authority of India.

Seth referred to an IMF-FSB synthesis paper published in July 2023, which advised against an outright ban on digital currencies. Finance ministers and central bank governors from G20 nations adopted this global regulator’s proposal in October.

Sumit Gupta, co-founder of Indian crypto exchange CoinDCX, praised the move, stating that it is a significant step towards regulating the crypto sector.

“As key stakeholders in this sector, we urge the government to actively seek input from domestic businesses. Engaging with local businesses will ensure that the regulatory framework is robust, inclusive, and supportive of innovation,” Gupta told crypto.news.

India currently doesn’t have a crypto regulatory framework in place but has imposed a 30% tax on profits generated via cryptocurrencies, alongside a 1% tax deducted at the source. However, this hasn’t stopped regulators from clamping down on the sector.

India’s Financial Intelligence Unit has mandated licensing for crypto service providers operating in the nation. As a result, several offshore crypto exchanges were blocked earlier this year.

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