Shaktikanta Das, the Reserve Bank of India’s governor, gave more insights on the matter of cryptocurrencies. As noted in his remarks, there have been few changes in the rules governing digital assets, so a government committee was established to investigate the matter.
Malhotra raised concerns about the risks that cryptocurrency could pose to India’s financial stability and monetary policy formulation. Recently, the Supreme Court expressed disapproval of the government for failing to establish clear rules for digital currencies, which led to the finance minister's statement.
Although cryptocurrency is not officially accepted, India has a tax policy in place for transactions involving cryptocurrency. At the start of 2022, the government introduced a 30% tax on capital gains from cryptocurrency. Additionally, a 1% tax is deducted at the source by law for every transaction. GST is charged on the services provided by cryptocurrency exchanges.
Additionally, these taxes should not be considered as formal government approval. India has not officially stated whether cryptocurrencies are legal or not. Though the sector falls under money laundering rules, they don’t include any special regulations just for it.
The government has released a paper to describe its approach to regulating cryptocurrency. Officials from the RBI, SEBI, and the Ministry of Finance have collaborated to review guidelines from other countries and develop their domestic policies. Upon finishing, everybody is encouraged to contribute their point of view during the public consultation process.
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The Supreme Court’s involvement in recent times proves that the standing of cryptocurrencies in India is unclear. As reports increase about unlawful acts involving digital currencies, the judiciary feels the need for a policy. Even after the RBI’s ban on crypto banking was declared invalid in 2021, it remains necessary to have updated and consistent laws for the sector.
The RBI is often concerned about the risks that a higher use of cryptocurrencies could trigger. The central bank emphasizes that paying attention and taking extra precautions are crucial when financial institutions adopt new technologies.