India Working on Crypto Regulatory Framework Based on IMF-FSB Recommendations, Legislation Expected in 5-6 Months
The Indian government is in the process of developing a regulatory framework for cryptocurrencies based on the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB). This framework is expected to lead to the introduction of legal legislation within the next 5-6 months. Siddharth Sogani, the CEO of CREBACO, which has collaborated with government agencies and ministries, revealed that the Indian government is focused on creating a five-point crypto legislature with a global approach.
During the recent G20 summit, India, alongside other G20 nations, welcomed the IMF-FSB joint recommendations for crypto regulations. These recommendations suggest regulating the crypto market instead of imposing a blanket ban. They serve as a set of regulatory guidelines that G20 countries can customize to shape their own crypto legislative frameworks in a collaborative manner.
In an interview with Cointelegraph, CREBACO CEO Siddharth Sogani shared insights into India’s approach to crypto regulations. He stated that the government is currently working on a five-point regulatory strategy, with an emphasis on global collaboration in areas such as crypto taxation.
The five-point framework being pursued by the Indian government includes the following:
1. Advanced Know Your Customer (KYC) requirements for crypto companies, encompassing compliance with the Foreign Account Tax Compliance Act (FATCA) and existing anti-money laundering standards.
2. Mandatory real-time Proof-of-Reserve audits for crypto platforms, to be reported directly to regulators.
3. Establishment of a uniform taxation policy across nations.
4. Granting crypto exchanges a similar status to authorized dealers, comparable to banks, according to the guidelines of the Reserve Bank of India (RBI).
5. The introduction of key positions, such as a Money Laundering Reporting Officer (MLRO), for crypto platforms.
Sogani highlighted the global shift towards a regulatory approach to cryptocurrencies, with countries like the United States and Europe already implementing specific regulations. He emphasized the necessity of regulations, stating, “Just imagine how well [the crypto ecosystem] would grow with proper regulations in place. Also, regulated markets reduce the risks of scams and illicit activities.”
India has consistently advocated for a global approach to crypto regulations, a standpoint reiterated by Prime Minister Narendra Modi during the G20 summit. A representative from the Finance Ministry confirmed that they have embraced the IMF-FSB recommendations and will work towards formulating regulations based on them in the coming months.
The Finance Ministry executive emphasized that the IMF-FSB recommendations offer a solid framework for India to shape its own approach to crypto regulation. They stated that the foundation for regulation is in place and that it is up to the country to decide the extent of its regulatory measures.
Banning cryptocurrencies is no longer seen as a viable option, according to the official, who also acknowledged the difficulty of enforcing a ban if other countries do not follow suit. India currently lacks specific crypto regulations, although a 30% tax on crypto gains was introduced in 2022. The commitment to formulating a comprehensive crypto framework within the next few months provides a positive outlook for the crypto industry in India.
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