- India is set to release a long-awaited discussion paper on cryptocurrency regulation in June.
- India’s Supreme Court criticized the government for delays in crypto regulation.
- While regions like the EU, U.S and Middle East advance crypto adoption, India’s high taxation and lack of clarity have driven over 90% of crypto activity offshore.
India is said to release a much anticipated discussion paper on cryptocurrency regulation in June. This signals a possible policy shift as global digital asset markets heat up.
The policy paper is expected to lay the foundation for public consultation and future regulatory action. It would also be significantly influenced by guidelines from the International Monetary Fund (IMF) and the Financial Stability Board (FSB).
Staunch Criticism from the Supreme Court and Crypto Industry
Interestingly, the discussion paper also coincides with the Indian Supreme Court’s heavy criticism of the government regarding prolonged inaction in regulating the crypto sector.
Justices warned that the absence of a clear legal framework could turn the crypto space into a “breeding ground for misuse”.
India has had a very ambiguous and inconsistent relationship with crypto over the years.
In 2022–23 financial years, India introduced a steep 30% tax on gains while mandating exchange registration with the Financial Intelligence Unit, yet falling short of providing legal recognition to digital assets. This taxation came under fire from the Indian crypto industry which pushed for reforms.
Meanwhile, a study done by Esya Centre, a New Delhi-based think tank, found that the taxation resulted in over 90% of Indian crypto moving offshore.
The Reserve Bank of India (RBI) has remained vocally skeptical, warning of risks related to money laundering and terror financing, and advocating for its own central bank digital currency (CBDC) as a safer alternative.
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Crypto enthusiasm around the world
Globally, regulatory momentum around crypto is at an all-time-high. The European Union came up with its Markets in Crypto-Assets (MiCA) framework, and in the United States, President Donald Trump’s administration has adopted a pro crypto stance.
In the Middle East, under the Cashless Dubai Strategy, Dubai’s Department of Finance (DOF) partnered with Crypto.com to allow residents and businesses to pay for government services via cryptocurrency. Additionally, MENA’s largest budget airline Air Arabia became the first in the region to accept the AE Coin stablecoin as payment.
As India discusses crypto policy in June, stakeholders across the industry will look forward to a coherent path forward in the rapidly evolving crypto economy.
A senior Indian government official, quoted in local media reports, stressed that India would prioritize national interest and make sensible decisions, acknowledging the sector’s significant economic implications.