In a move that could signal major changes ahead for digital currencies, India is re-examining its long-held skeptical stance on cryptocurrencies. The review comes on the heels of growing crypto acceptance around the world, including recent policy shifts in the United States.
Global Changes Spark a Fresh Look
Ajay Seth, India's Economic Affairs Secretary said, “Digital assets don’t believe in borders”, highlighting that cryptocurrencies operate globally and can’t be managed by any single country alone. Because several nations are embracing crypto in new ways, India feels the need to take another look at its own policies. This means that a discussion paper on crypto—which was expected in September 2024—might be delayed further as the government weighs its options.
Crypto Around the Globe
A notable twist in the global crypto story is happening in the United States. President Trump recently signed an executive order to form a working group on digital assets. This group is tasked with exploring innovative ideas, including creating a national cryptocurrency reserve. Such steps from major economies are encouraging countries like India to rethink their approach, ensuring they do not fall behind in what many see as a digital revolution.
India’s Past and Present Crypto Policies
Historically, India has been tough on cryptocurrencies. Despite heavy trading taxes and a reputation for strict regulations, many Indians have still invested in crypto. For instance, in recent years, India's Financial Intelligence Unit (FIU) has taken action against several offshore crypto exchanges for not following local rules. Even big players like Binance have faced significant fines, underlining the country’s cautious attitude.
However, not everyone agrees with these hardline measures. Some legal experts, like Amit Kumar Gupta from the Supreme Court of India, argue that these high taxes and strict rules might be discouraging innovation. Gupta suggests that by treating cryptocurrencies like “worse than gambling”, the government could be missing out on the benefits of a rapidly evolving technology.
The Future: Crypto or Digital Currencies?
Adding another layer to the debate is India’s interest in Central Bank Digital Currencies (CBDCs). Shaktikanta Das, the former governor of the Reserve Bank of India, has praised the country’s move towards testing a CBDC. In his view, digital currencies issued by the government are “the future of currency”. The Reserve Bank is even looking to expand its international cross-border payment platform using CBDCs, which could become the main way countries settle payments with one another.
What Does This Mean?
If you’re new to the world of crypto, this might seem a bit overwhelming. In simple terms, India is carefully considering whether to ease up on its strict crypto rules because many other countries are embracing digital currencies. The government is weighing the potential benefits of innovation and international collaboration against the risks that come with cryptocurrencies, such as money laundering and other illegal activities.
In the coming months, we are to see significant changes in India’s approach to crypto. Whether you’re an investor, a tech enthusiast or just curious about digital currencies, these developments could impact how you interact with the evolving world of money.
Source: Reuters
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