The Indian government is gearing up to introduce extensive regulations for the crypto sector, according to reports in local media. The first step in this plan involves releasing a consultation paper in the next few weeks to gather feedback from stakeholders. This move demonstrates the government’s dedication to establishing a regulatory framework for digital currencies in the country.
A panel led by the Secretary of the Department of Economic Affairs (DEA) is taking the lead in drafting this consultation paper, expected to be made public between September and October. The paper will touch upon various aspects of crypto regulation, such as identifying responsible regulatory bodies, detailing the necessary components of a regulatory framework, and proposing a timeline for implementation.
India’s efforts in regulating cryptocurrencies are aimed at mitigating the risks related to digital assets, especially in developing economies where concerns about financial stability are heightened. Economic Affairs Secretary Ajay Seth highlighted the significant risks posed by cryptocurrencies, particularly in emerging markets. He emphasized the need for robust regulatory mechanisms to address these risks effectively.
Despite regulatory uncertainties and a strict tax environment, crypto usage in India has been on the rise. An estimated 115 million Indians are currently engaged in crypto investments, accounting for about 15% of the population aged 18 to 60. This makes India one of the largest markets for digital assets globally. The growth in crypto investments in India is being primarily driven by young investors under 30, many of whom see digital assets as a long-term investment opportunity.
India’s steps towards regulating the crypto sector reflect a growing recognition of the importance of creating a regulatory framework for digital currencies. With the upcoming release of the consultation paper and the government’s commitment to addressing the risks associated with cryptocurrencies, the future of crypto regulation in India looks promising.
