The Indian government is reportedly discussing crypto regulation efforts in parliament, but the date for the introduction of any framework is still uncertain.
India is a very large jurisdiction for the crypto sector. According to the survey reports, currently, the largest number of cryptocurrency traders are basically from India. In terms of total valuation of crypto asset holdings, India is still far behind American crypto investors. Currently, crypto companies provide crypto services under a partial regulatory framework. Cryptocurrencies have been regulated by the Prevention of Money Laundering Act (PMLA) since March 7, 2023. Earlier this year, many cryptocurrency companies faced regulatory pressure for not registering with India’s FIU unit. .
On December 16, 2024, some discussions in parliament addressed the issue related to the regulation of cryptocurrencies in the Indian jurisdiction.
The discussion on this matter confirmed that lawmakers are working on the regulatory framework, but due to the decentralized nature of cryptocurrencies, they must also collaborate with financial regulators of foreign countries to prohibit illicit crypto transactions or money laundering activities.
For this regulatory framework, a discussion document may be published to outline regulatory positions, but no specific timeline is established for it.
Prior to this, Indian leaders had already showcased their global crypto regulation efforts during the G20 summit hosted by India.
In the current scenario, Indian financial regulators are focused on finding a perfect way to regulate the crypto space to protect crypto investors and at the same time give better room for the crypto sector to evolve.
Due to the decentralized nature of cryptocurrencies, financial regulators are not at that stage where they can claim to provide investor protection.
India and missing crypto exchanges
Crypto trading platforms WazirX and Bitbns, which were already registered with the FIU, crashed severely following a cyber hacking incident. Many of the customers belonging to this platform raised questions as to why Indian financial regulators require registration, for cryptocurrency companies and why they collect taxes from cryptocurrency traders while ignoring cryptocurrency related incidents.
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