Addressing a media briefing after the central bank’s Monetary Policy Committee (MPC) meeting, Malhotra said there is currently no new development regarding cryptocurrencies. His statement came in response to a question about the Supreme Court’s recent observations on the need for a clear regulatory framework for crypto.
“There is no new development as far as crypto is concerned. A committee of the government is looking after this,” the RBI Governor said. “Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy.”
Last month, the Supreme Court pulled up the Centre for the lack of a clear policy on cryptocurrencies. A bench comprising Justices Surya Kant and N Kotiswar Singh asked why the government had not yet come out with a definite regulatory stance. The court was hearing a bail application in a case involving illegal Bitcoin trading, where the accused, Shailesh Babulal Bhatt, was arrested in Gujarat.
Right now, cryptocurrencies aren’t illegal in India, but they aren’t fully regulated either. That means there’s no specific law that bans them, but there’s also no proper framework to govern how they’re used. For now, crypto is mainly watched under anti-money laundering rules.
In 2022, the government introduced a 30% flat tax on any profits made from crypto trading. On top of that, a 1% tax is deducted at source (TDS) for every transaction. If you’re using a crypto exchange, GST is also charged on their services. But just because crypto is being taxed doesn’t mean it’s officially legal; there’s still no clear law declaring it so.
To fix this regulatory gap, the government is working on a discussion paper that will lay out possible rules for crypto in India. An inter-ministerial group (IMG), which includes members from the RBI, SEBI, and the Finance Ministry, is studying global practices to help shape India’s approach. Once the paper is out, people and industry stakeholders will get a chance to share their views before any policy is finalized.
India’s crypto policy has had its ups and downs. Back in 2018, the RBI had told banks not to offer services related to crypto. But in 2021, the Supreme Court struck that down, saying it wasn’t legal to impose such a ban. That ruling was seen as a win for the crypto community.
Even with that decision, the legal status of crypto in India remains unclear. The Supreme Court recently urged the government to come up with a clear-cut policy, especially as concerns grow about illegal crypto activities. At the same time, the RBI has continued to warn that cryptocurrencies could be a risk to the country’s financial stability.
Also Read: India Can Lead the Web3 Wave With Clear Rules: Sumit Gupta