The Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha that the government has not set a definitive timeline for establishing a regulatory framework for Virtual Digital Assets (VDAs) in India.
Crypto Regulations: A Need of the Hour
In response to queries from two Members of Parliament regarding the regulatory framework and its timeline, Chaudhary highlighted the borderless nature of VDAs. He also emphasized the need of international collaboration to prevent regulatory arbitrage.
Following the global shifts towards digital assets, the Indian authority is also preparing to introduce a regulatory framework for digital assets.
He also raised concerns that the Indian government does not register cryptocurrency exchanges, underscoring the importance of global cooperation for effective regulation of crypto assets.
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Pankaj Chaudhary pointed out that a comprehensive regulatory framework for VDAs would require alignment with international standards. He noted that in March 2023, VDAs were brought under the purview of the Prevention of Money Laundering Act, 2002 (PMLA). The motive for this approach was to monitor transactions related to digital assets. Additionally, income derived from VDAs is subject to taxation.
During India’s G20 presidency, the International Monetary Fund (IMF) and Financial Stability Board (FSB) presented a synthesis paper outlining a proposed ‘G20 Roadmap on Crypto Assets’, which addressed risks specific to Emerging Markets and Developing Economies (EMDEs).
Chaudhary stated that all jurisdictions, including India, are expected to evaluate these risks and collaborate with standard-setting bodies and G20 to determine appropriate regulatory measures.
The demand for a regulatory framework has become stronger after the leading Indian crypto exchange, WazirX suffered a massive cyber attack on July 18, losing over $230 million in user funds.
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