India finance minister: Regulating virtual currency industry requires international collaboration

Pankaj Chaudhary, India’s Minister of State in the Ministry of Finance, has stated that the government will anticipate international collaboration in its quest for digital asset regulation.

Chaudhary made the remarks at the Lok Sabha, the lower house of India’s bicameral legislature, where he disclosed the status of the executive’s plan for regulating the industry. He confirmed that an overarching legal framework would be tendered before Parliament, in addition to a public consultation to collate diverse opinions.

In his address, Chaudhary told lawmakers that effective regulatory control over the industry would only be possible through a concerted global effort. He cited the fluid and borderless nature of virtual assets, which allows them to be used in multiple jurisdictions, leaving regulators in a unique quagmire.

“Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage,” said Chaudhary. “Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”

This is not the first time Indian government officials are pushing for global cooperation in regulating digital assets. Finance Minister Nirmala Sitharaman, in her six-day visit to the United States in October, disclosed that the country would use its role as the G20 president to push for standard operating procedures (SoP) for virtual currencies.

“We would definitely want to collate all this and do a bit of study and then bring it on to the table of the G20 so that members can discuss it, and hopefully arrive at a framework or SoP so that globally, countries can have a technology-driven regulatory framework,” said Sitharaman.

Pushing for regulations, but the general outlook remains grim

Although India is pining for increased industry regulation, the government’s stance toward the industry and the underlying technology remains negative.

The government continues to eye the asset class with skepticism, attempting to deter individuals from investing in them by imposing stiff tax requirements. Currently, India has one of the most stringent tax requirements for digital currencies, with 30% being charged on capital gains.

Sitharaman also confirmed that the government was not working on any common platform for banks using blockchain. However, the Reserve Bank of India (RBI) was using the technology in testing a range of innovative technologies in its regulatory sandbox program.

The RBI has also opted not to proceed with distributed ledger technology in launching its central bank digital currency (CBDC), citing potential security risks arising from decentralization.

 Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets