India to only allow pre-approved cryptocurrencies trading on exchanges
- Indian government plans to present cryptocurrency bill in this month's parliamentary session
- Not looking to ban digital assets; might only allow pre-approved cryptocurrencies to be traded on exchanges.
- A pre-verification approach may create challenges for thousands of peer-to-peer exchanges in the country.
India wants to tighten regulation around cryptocurrencies by only allowing certain digital assets to be traded on crypto exchanges. A source familiar with the matter told Reuters that this process is currently under discussion and that the government plans to introduce and pass a law for the new asset class in the parliamentary session this month.
India to present new cryptocurrency bill
During the parliament’s winter session, the Indian government will present a new cryptocurrency regulation bill that will ban the use of digital assets as payment but will allow the trading of crypto as assets.
Government agencies, including the Reserve Bank of India (RBI) were in discussion with representatives of the cryptocurrency industry earlier this week. The country previously considered banning the issuance, mining and possession of digital assets. The Indian government has softened its stance on crypto since. It is unlikely to follow an earlier plan to ban private cryptocurrencies and is now looking to allow the trading of pre-approved digital assets on crypto exchanges. However, sources close to the matter stated that this could be a cumbersome process.
The sources further stated that the government is likely only to allow pre-approved coins to be traded, while holding or trading unapproved digital assets may result in a penalty. The new approach to regulating cryptocurrencies puts forth a challenge to thousands of peer-to-peer exchanges.
The sources added that hefty capital gains and other taxes might be imposed on crypto investors in the country to discourage digital asset trading. Investors may also be required to pay over 40% on any crypto earnings, in addition to any goods and services sales taxes and securities transaction taxes.
India’s Prime Minister Narendra Modi recently said that digital assets must not fall into the "wrong hands and spoil our youth" and further urged all democratic nations to work together to ensure that such events do not happen.
The Prime Minister further warned that unregulated cryptocurrency markets could be used for money laundering and terror financing purposes.
Author
Sarah Tran
Independent Analyst
Sarah has closely followed the growth of blockchain technology and its adoption since 2016.
