Indian Crypto Proponents Hopeful for Clarity in Parliament Budget Session

After a crypto bill has already been delayed twice in India, key players are hopeful for some clarity from the current budget session of the Parliament.

We know that a crypto bill has been expected in India since the last year, however, only a taxation regime has been proposed so far by the government. The government of India has proposed a 30% tax on the proceeds from the sale of cryptocurrencies and other digital assets on Feb. 1, 2022. Additionally, a source-based tax (TDS) on payments made to transfer digital assets at 1% was introduced.

Now, it remains to be seen if the 2022 Finance Bill will be discussed in the session that began on March 14, and is expected to continue till April 8.

Uncertainty haunts the Indian crypto sector

Anupam Shukla, Partner, Pioneer Legal told the Economic Times, “A robust legislation to regulate VDA’s [virtual digital assets] has been under deliberation at least since 2017.” However, the ongoing uncertainty has impacted the crypto sector in India, as per the executive.

This essentially means that crypto companies and businesses might have been heading to more crypto-friendly destinations amid the uncertainty. Recently, even Polygon co-founder Sandeep Nailwal agreed that India’s crypto “brain drain is absolutely crazy.”

Meanwhile, some continue to strongly advocate against the proposed tax regime.

Vinu Peter Immanuel, Associate Partner at Link Legal told ET that “we expect the government to spell out the framework for the proposed digital/virtual rupee and clear the air on the legal status of the private cryptos.”

Central Bank to not regulate the digital asset market

However, so far, there appears to be no consensus of the framework that will regulate the sector. Minister of State for Finance Pankaj Chaudhary had responded to a query recently where he stated that the Centre has not agreed to set up a regulatory authority for the crypto sector in India. But, it is worth noting that the general assumption is that the securities regulator SEBI might be appointed to overlook the sector.

Furthermore, Chaudhary clarified that the government is not considering a cryptocurrency that will be regulated by the central bank. Essentially remarking that cryptos are “unregulated” in India. However, an RBI-backed digital rupee will be a central bank-backed digital currency (CBDC), the official had noted in the upper house of the Rajya Sabha.