India’s Ministry of Finance said there are no proposals for legislation governing the sale and purchase of digital assets. However, he noted that Virtual Digital Asset Service Providers (VDASPs) are reporting entities for anti money laundering (AML) purposes. There were some mixed messages as the G20 wants to see some steps taken.
Pankaj Chaudhary, Minister of State at the Ministry of Finance, shared the information as part of a written response to a question from the lower parliament, Lok Sabha, by GM Harish Balayogi.
We’d observe that the Mr Chaudhary’s wording was very specific: “regulating the sales and purchase of virtual digital assets”. That might not cover the regulation of service providers or the custody of digital assets.
Apart from queries about planned regulation, Mr Balayogi also asked for figures for the total value of digital assets held by Indians and the number of companies and exchanges involved in the sector. Mr Chaudhary said the government doesn’t have that information because the sector is unregulated.
However, he separately noted that there’s a G20 Roadmap on Crypto Assets which was adopted during India’s G20 Presidency last year. “All jurisdictions, including India, are expected to evaluate their country-specific characteristics and risks, and engage with standard-setting bodies and the G20 to appropriately consider any necessary measures for crypto assets,” said Mr Chaudhary.
Financial Stability Board recommendations
The reason for saying these are mixed messages, is the Ministry of Finance argued it doesn’t have data because the sector is not regulated. If India plans to comply with the G20 roadmap, it needs data. And it will likely need to introduce regulations.
The Financial Stability Board (FSB) published nine high level recommendations for regulating crypto-assets which were incorporated into the G20 roadmap. Recommendation six includes data collection, recording and reporting.
Most of the FSB’s nine recommendations refer to crypto-asset issuers and service providers:
- Regulatory powers and tools (to regulate, supervise, oversee crypto markets)
- General regulatory framework
- Cross-border cooperation, coordination and information sharing
- Governance
- Risk management
- Data collection, recording and reporting
- Disclosures
- Addressing financial stability risks arising from interconnections and interdependencies
- Comprehensive regulation of crypto-asset service providers with multiple functions.
Meanwhile, in 2021 there was a planned crypto bill that didn’t progress. The Reserve Bank of India had constrained the crypto sector by not allowing banks to provide services to crypto exchanges. That changed in 2020 when the Supreme Court overturned the central bank’s ban.
According to the Chainalysis Global Crypto Adoption Index, India ranks number one overall and in every category apart from P2P transfers where it ranks fifth.
Gadgets 360 first reported the story. Ledger Insights directly sourced a copy of the parliamentary question and answer.
