India reconsiders cryptocurrency stance amidst global shifts

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Yogesh Kumar
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New Delhi: India is reassessing its approach to cryptocurrencies in light of evolving global perspectives on these digital assets, according to a senior government official who spoke with Reuters on Sunday. 

The official, Economic Affairs Secretary Ajay Seth, indicated Reuters that this review might lead to further delays in the release of a discussion paper on cryptocurrencies, which was initially expected in September 2024. 

Seth emphasised that India is closely monitoring the evolving landscape of cryptocurrency usage and acceptance in various jurisdictions.

This reassessment follows recent developments in other countries, including the United States, where President Trump recently signed an executive order directing the creation of a cryptocurrency working group. 

This group will be tasked with formulating new regulations for digital assets and exploring the possibility of establishing a national cryptocurrency reserve.

Despite India's historically cautious stance on cryptocurrencies, the country has witnessed a surge in cryptocurrency investments in recent years. However, the government has maintained a strict regulatory approach, imposing substantial taxes on cryptocurrency trading and enforcing compliance with local rules.

In December 2023, India's Financial Intelligence Unit issued show-cause notices to nine offshore cryptocurrency exchanges for non-compliance. 

Additionally, Binance, the world's largest cryptocurrency exchange, faced a fine of 188.2 million rupees ($2.25 million) in June 2024, shortly after registering with the FIU to resume operations in the country.

Last year, India's market watchdog recommended that several regulators jointly oversee cryptocurrency trading, suggesting a potential openness to private virtual assets within the country. This contrasts with the views of the central bank, which has consistently warned about the macroeconomic risks associated with private digital currencies.

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