#cryptonews
India’s stance on crypto regulation continues to evolve, reflecting a balancing act between innovation, investor protection, and economic stability.
In a recent statement to the Lok Sabha, the government acknowledged the challenges of regulating virtual digital assets (VDAs) without international collaboration.
There is no definitive timeline for introducing such guidelines.
While taxation on crypto-related income and anti-money laundering measures are already in place, the absence of a comprehensive regulatory framework still presents a problem due to digital assets’ borderless nature.
Since March 2023, VDA transactions have been brought under the purview of the Prevention of Money Laundering Act (PMLA). It enables authorities to scrutinize the origins and movement of crypto-related funds.
The Indian government’s approach to VDAs has relied on a patchwork of existing laws and policies.
Other legal frameworks, such as the Information Technology Act 2000 and the Companies Act 2013, further regulate certain aspects of the digital asset ecosystem. However, while necessary, these measures fail to address the unique challenges VDAs pose. The government recognizes that crypto assets operate beyond national borders, making them inherently difficult to regulate through domestic frameworks alone.
Additionally, income from VDAs is taxed under the Income Tax Act 1961.
One of the most pressing concerns is investor protection. The cross-border nature of VDAs limits the effectiveness of purely domestic safeguards, which they rule as exposing investors to fraud and other risks.
While India has emerged as a leader in global crypto adoption, they claimed the the sector’s rapid growth has exposed significant vulnerabilities.
These dual objectives are not easily reconciled, particularly in a sector as dynamic and unpredictable as cryptocurrency. Stakeholder consultations have played a key role in shaping India’s approach to VDAs.
On the other hand, it is working to implement measures that protect investors without undermining financial stability.
The government’s response to such challenges has been twofold. On one hand, it seeks to ensure that innovation in the crypto space is not stifled.
