India decides to legalize crypto on as an asset class but not for payments

• The Indian government will pass the crypto legalization and regulatory rules in the upcoming winter session of the Parliament.
• The government is also mulling upon deciding the taxation over the profits derived from the crypto assets.

After having an uncertain stand oN cryptocurrencies for the past many months, India is finally getting clear on crypto regulations. Over the last week, Prime Minister Narendra Modi has conducted some crucial meetings with the finance ministry officials.

The government has decided to take a nuanced approach instead of shutting down the doors for cryptocurrencies entirely. As a result, India plans to legalize the use of digital assets as an asset class such as gold, shares, and bonds. However, the country won’t be allowing the use of digital assets as a mode of payment or transaction settlement.

People familiar with the matter told Economic Times that the government is finalizing the legalization of crypto. This will pave the way for the crypto regulation bill and the government will present it in the parliament’s winter session. One of the government sources told the publication: “Active solicitation would not be permitted… Details of the bill are being finalised”.

The source also said that the crypto legalization process will move further for cabinet approval in the next two-three weeks. The Securities and Exchange Board of India (SEBI), the regulatory body for the securities and commodities market in India will look after its regulations. However, the final call regarding the same is still pending. The source said: “Discussions on regulations are going on”.

Indian government working on crypto taxation

Along with crypto regulations, the Indian government is also working on the matter of crypto taxation. Also, the upcoming legislation will address this matter very soon.

Just like crypto regulations, the government will also introduce a bill on crypto taxation in the upcoming winter session of the parliament.

Last Saturday, during the meeting with Prime Minister Narendra Modi, cryptocurrencies took the center stage in the discussion. The government remains concerned about the use of digital assets for terror financing and money laundering. However, the overall approach remained positive. The source familiar with the matter said:

The government is cognizant of the fact that this is an evolving technology, it will keep a close watch and take proactive steps. There was consensus also that the steps taken in this field by the government will be progressive and forward-looking.

India has seen a very strong adoption of digital assets over the last year. But on Tuesday, November 16, RBI governor Shaktikant Das noted that the number of crypto accounts in India seems exaggerated.

The decision to legalize crypto as an asset class is certainly a welcome move for the Indian crypto community. It will probably lead to higher adoption in the coming years.