Globally harmonized regulation
India, which will hold the G20 presidency this year, appears to be working hard to spur discussions toward an international cryptocurrency policy agreement ahead of the summit in September this year.
India became the chair country on December 1, 2022, but Ajay Seth, Undersecretary for Economic Affairs, Ministry of Finance, India, made it a priority at the G20 at the meeting of Deputy Finance Ministers and Central Bank Deputy Governors held in Bangalore, India, in the same month. He cited policy approaches to cryptocurrencies as one of the topics to be discussed.
The G20 Financial Sector Working Group agenda includes “Cryptocurrency Risk Assessment and Policy Approaches”, reflecting India’s preference.
connection:G20 Prioritizes “Building Consensus on Cryptocurrency Policy”
Also, at the G20 Finance Ministers and Central Bank Governors Meeting held in February this year, India held a seminar to discuss a common framework for cryptocurrency regulation. The need for a common cryptocurrency taxonomy, the benefits and risks of cryptocurrencies, macroeconomic policy and financial stability challenges, and regulatory responses were discussed.
Indian Finance Minister Nirmala Sitharaman said that due to the nature of cryptocurrencies, “no single country can do anything” when it comes to regulating them. He said he was consulting with countries on the feasibility of a “standard operating approach” that could be adopted by all G20 members and contribute to the development of the regulatory framework.
connection:India’s G20 Presidency Leads Discussions on International Cryptocurrency Policy
Global cryptocurrency regulation
On April 14, Finance Minister Sitharaman tweeted about the discussion at the second meeting of the G20 Finance Ministers and Central Bank Governors Meeting held in Washington, D.C., as follows:
On India’s proposal to regulate crypto assets, there’s a greater acceptance among G20 members that any action on crypto assets must be global. G20 & its members agree that it’ll not be possible for a single country to deal with crypto assets.
— NSitharamanOffice (@nsitharamanoffc) April 13, 2023
India’s proposal for crypto regulation has led to a growing recognition among G20 members that any action on crypto should be global. The G20 and its members agree that no single country can deal with crypto assets.
The report on cryptocurrency regulation released by the International Monetary Fund (IMF) has already been discussed at the G20, and the report on cryptocurrency regulation by the Financial Stability Board (FSB) to be released in July will be discussed at the next Finance Ministers/Central It will be discussed at the bank governors’ meeting, he said.
India has proposed a joint report by the IMF and FSB to support global and coordinated crypto policymaking.
Indian regulatory landscape
India has one of the highest crypto penetration rates among the G20 countries, ranking fourth in the world in the 2022 cryptocurrency adoption index by blockchain data company Chainalysis.
However, there are some aspects of regulation that are lagging behind. While many countries have introduced some kind of license or registration obligation for businesses that handle cryptocurrencies, India has yet to introduce a registration system.
On the other hand, in terms of the tax system, from April last year, income generated from virtual currency transactions will be taxed uniformly at 30%. In addition, in all virtual currency transactions, 1% will be applied as withholding income tax if income or gifts exceeding 10,000 rupees (about 16,700 yen) per year are generated.
The tax has been met with much skepticism from Indian industry insiders, who say it could hamper the growth of the industry as a whole and lead to more capital outflows abroad.