A couple of days ago, India released a discussion paper on the policy for its cryptocurrency by September, a development that is of interest to many.
I believe it's high time for the country to take a definitive step in regard to digital assets. The fact that Economic Affairs Secretary Ajay Seth will be at the forefront of this development goes on to prove how critical and serious the government has been over the issue regarding crypto.
As far as I understand, this is not about a full-blown regulation just yet. Rather, though, it looks like they're aiming for some kind of consensus-based approach by way of consulting various stakeholders. This is refreshing in a way. Too many times, governments rush out and impose rules on industries they hardly understand.
The involvement of the RBI and SEBI within this inter-ministerial group is crucial to me. These are heavyweight institutions, and the input from them would decide the future of crypto in India. I am keenly watching how they will square off the RBI's skepticism with SEBI's relatively open stance.
India's approach to crypto has been pretty piecemeal. They have slapped some hefty taxes on it but haven't provided a comprehensive framework. I think this new discussion paper could be the first step toward changing that. It's encouraging to see them turning toward global standards, at least according to the Financial Action Task Force.
It will be very interesting to see how it plays out in the broader context of India's digital economy.
Tried and true, India has really led in innovation related to FinTech, so the question would be if further clarity in terms of a crypto policy bodes well for further strengthening that sector.
How are they going to strike that balance with clearly needed consumer protection?
One thing that really strikes me is the comment from Seth that regulation will be limited only to anti-money laundering and electronic funds transfer aspects. I think it might be too narrow a focus. The impact of crypto goes beyond financial transactions per se; I wish the discussion paper would produce wider implications.
Looking back at Seth's statement from September 2023 on India analyzing global crypto frameworks, well, I can't help feeling good that they're following up on them. But somehow, I feel that they are doing this a bit slowly. The crypto world moves fast, and months-long policy discussions might be somewhat behind the times.
It is an interesting time to make the announcement when countries elsewhere in the world have just launched spot ETFs. I'm not sure if it's a case of global developments nudging India to hasten the process of policymaking. My personal take is that India should not be left behind in this global race for cryptocurrency.