Crypto industry players see light at end of tunnel despite regulatory vacuum. Here’s why

The Ministry of Finance recently made it clear in a written reply in the Lok Sabha that the government is not considering a law to regulate the transaction of cryptocurrencies.

“Currently, there is no proposal to bring legislation for regulating the sales and purchase of virtual digital assets in the country,” Pankaj Chaudhary, Minister of State (MoS) in the Ministry of Finance, told the Lok Sabha via a written response.

It is interesting to note that this is not the first time that the government has been evasive about its commitment to establishing a regulatory framework for cryptocurrencies.

Union Finance and Corporate Affairs Minister Nirmala Sitharaman recently stated that there should be a global understanding on cryptocurrencies and merely rolling out regulations by one country was not going to make much headway into the space of regulations.

In November 2021, Sitharaman — in a reply to a question on bitcoin in Parliament — had said that the government has no proposal to recognise Bitcoin as a currency.

What industry players think?

However, crypto industry participants are not too pessimistic about Chaudhary’s statement, which was released at the behest of the Finance Ministry since they pin hopes on a discussion paper on digital currencies likely to be released next month.

“The Department of Economic Affairs (DEA) secretary indicated just a few weeks ago that a discussion paper is likely to be released by September 2024. We remain optimistic and will look forward to this paper to better understand the potential next steps for the virtual and digital assets (VDA) sector in India," says R Venkatesh, SVP and Head of Public Policy, CoinSwitch.

Likewise, Dilip Chenoy, Chairman of Bharat Web3 Association, also saw hope in the Department of Economic Affairs secretary's recent comments about the upcoming discussion paper on VDA policy. “We look forward to studying the paper in detail when released for public consultation and offering our policy inputs. We applaud India’s leadership during the G20 Presidency last year in building consensus on crypto assets policy and adopting the G20 Roadmap on Crypto assets,” said Chenoy.

“We urge the government and regulators to take a lead in formulating a comprehensive regulatory regime for Web3/VDAs in India,” he added.

Shivam Thakral, CEO of BuyUcoin, said, "The lack of clear regulations for the nascent industry is concerning, as it leaves the Crypto Assets sector unregulated in India. Establishing clear policies is important for fostering innovation and generating employment. This absence of a framework is hindering entrepreneurial investment and compromising security."   

CoinDCX refused to comment on this development.

It is interesting to note that the finance ministers of G20 nations in October 2023 adopted the synthesis paper released by the IMF-Financial Stability Board (FSB) the previous month.