India has a strict cryptocurrency policy and has had inconsistent views on the virtual money. The regulations governing it are constantly evolving. Additionally, those who have the guts to circumvent the norms and regulations must pay high taxes. This is said to be about to change, though. According to a Reuters story, the government is reconsidering how it currently handles cryptocurrency investment and commerce in India. According to reports, the main cause of this alleged change is the global shift in attitudes toward cryptocurrencies, particularly in the US, where Donald Trump has been making pro-crypto statements. In fact, Trump introduced his own meme coin in the US just before he was sworn in as president, which ultimately caused Bitcoin to reach an all-time high of $100,000.
“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of usage, acceptance, and the importance of crypto assets. In that stride, we are reviewing the discussion paper once again,” Reuters reports Ajay Seth, India’s economic affairs secretary, as saying.
Trump recently oversaw the formation of a working group on cryptocurrencies in the US. The proposed panel is intended to help establish a national cryptocurrency reserve and make recommendations for new rules pertaining to digital assets.
Regulators in India, however, have been quite stringent. Nine offshore cryptocurrency exchanges, including Binance and Kucoin, received show-cause warnings from India’s Financial Intelligence Unit (FIU) in December 2023 for violating local laws. The Ministry of Electronics and Information Technology was also asked by the FIU to restrict the URLs of these platforms inside India.
The biggest cryptocurrency exchange in the world, Binance, was hit with a hefty punishment of Rs 188.2 million in India in June 2024. Only a month has passed since Binance registered with the FIU in an effort to start doing business there again. The Prevention of Money Laundering Act (PMLA), 2002, which requires virtual digital asset service providers (VDA SPs) to register as “Reporting Entities” and adhere to anti-money laundering procedures, was the reason for the fine, according to FIU.
Shaktikanta Das, the previous governor of the RBI, also took a strong stance against cryptocurrencies in India in 2023. “Crypto should be banned, given its lack of underlying value. It’s a form of gambling, nothing more than 100 per cent speculation,” Das said.
The news on the change in the government’s position on the digital currency gives merchants in India optimism, despite requests for a multi-regulatory framework for the industry. It will be fascinating to observe how the administration now strikes a balance between the internal debate about cryptocurrency legislation and the external pressure from world events. We can only hope that the postponement of the bitcoin discussion paper, which was originally scheduled for September 2024, would benefit the nation’s cryptocurrency dealers.
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