Crypto Regulation To Be A Priority For India At G20 Summit: What To Expect

While cryptocurrencies are still unregulated in India, they are clubbed under virtual digital assets (VDAs).

It's safe to speculate that cryptocurrencies might not get banned in India anytime soon.

Source : Ewan Kennedy/Unsplash

Cryptocurrencies are currently going through an unprecedented meltdown, sending the price of Bitcoin (BTC) — the oldest and most valued crypto coin — down to a two-year low. It is largely believed that the latest bloodbath is caused by the liquidation issues of crypto platform FTX, which also saw a loss of millions due to “unauthorised transactions”. The recent dip in prices has once again brought to the forefront discussions on bringing in regulations to protect investors from the adverse effects of the crypto sector's volatile nature — so much so that crypto regulation will be one of the top priorities for India at the upcoming G20 summit.

Earlier this month, Chief Economic Advisor V. Anantha Nageswaran said at an Indian Council for Research on International Economic Relations (ICRIER) event that the third objective of India’s G20 presidency will be to identify "consensus-based solutions for accelerating the scale and scope of the response of the global community to many transboundary challenges such as regulation of virtual assets." 

The 2022 G20 Summit will be held in Nusa Dua, Bali, Indonesia, on November 15-16. 

Apart from Nageswaran, some top government officials have also said that a decision on crypto regulation will indeed be sought after by India at the summit, as per media reports.

Will India ban crypto? Not likely

The Reserve Bank of India (RBI) has always maintained a hard stance against cryptocurrencies, at times even advocating a ban on trading with digital assets altogether, owing to the extremely volatile nature of such tokens. However, the Centre is yet to show any movement along these lines.

In fact, the Indian government is keen on tapping into the digital coin space. In November, under the Centre’s directions, the RBI launched the first pilot for its own central bank digital currency (CBDC), known as Digital Rupee or e₹. For now, the RBI has only rolled out a pilot for the wholesale variant of the e₹, carrying the moniker of e₹-W. The retail variant, e₹-R, is expected to be piloted within this month. As per RBI Governor Shaktikanta Das, these pilots will help the regulator understand the various aspects of the Digital Rupee before a general rollout is done, which Das said will happen soon as well.

For those unaware, a CBDC is a central bank-issued digital coin that has the same value as the fiat rupee. This means that the value of e₹ will not appreciate or depreciate in time. 

In introducing the Digital Rupee, India has joined a long list of countries (including many G20 members) who have launched, or started experimenting with, their own version of the CBDC, including the likes of China and Iran. 

While cryptocurrencies are still unregulated in India, they are clubbed under virtual digital assets (VDAs). Under the new tax regime that went into effect on April 1, 2022, VDAs attract taxation of 30 percent on gains. A TDS of 1 percent is applied on top of that. 

Judging by the keen interest in CBDCs and learning from their implementation, and a general understanding (and cautious) approach to crypto as a whole, it’s safe to speculate that cryptocurrencies might not get banned in India anytime soon. However, it’s best to expect even stricter regulations to come into effect soon. 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.