G-20 News

DEA Secretary Ajay Seth, CFO News, ETCFO

India is in favor of a global consensus on the regulation of cryptocurrencies as a local response may not yield the desired results as these instruments are traded on the internet and are not tied to any jurisdiction, said Economic Affairs Secretary Ajay Seth.

“Regulation or prohibition whatever, an appropriate policy response to crypto assets is being crafted. How long, I am unable to put my finger on it. I certainly don’t see that happening in the session The work is ongoing,” he said when asked if the government would issue a regulation on private cryptocurrencies during the current budget session of parliament.

He further stated that discussions on cryptocurrency regulation would begin at the G20 – a grouping of developed and developing economies.

“Whatever regulations are introduced, unless there is a global consensus, they will not succeed. It may be 80-90% successful but it will not be a complete solution. So at this stage we interact with various stakeholders, especially institutional players and not crypto players.

“Stakeholders who have a mandate for monetary policy, fiscal policy, financial stability and development economics are in contact. I expect the discussion to start during the current year within the G20 forum on an appropriate global response to crypto-assets,” he said. PTI in an interview.

The first meeting of G20 finance ministers and central bank governors under the Indonesian presidency is due to start on February 17. The second meeting will take place in April and the third in July.

Seth further said that two actions were announced in the budget – first, a central bank promoted digital currency and to facilitate the incorporation of all necessary amendments to the RBI Act into the Finance Act.

Thus, he claimed, the digital currency promoted by RBI would be a reality in 2022-23, as announced in Finance Minister Nirmala Sitharaman’s budget.

“Digital currency will also lead to a more efficient and cheaper currency management system. Hence, it is proposed to introduce digital rupee using blockchain and other technologies to be issued by the Reserve Bank of India, from from 2022-23,” Sitharaman said in his budget. word.

A blockchain is basically a digital ledger that records transactions that can be tracked.

The second measure concerns the tax implications related to crypto assets, Seth said, but added that tax clarity does not mean the government legitimizes it.

“All income is acceptable (for tax purposes) except for exempt income such as agriculture. The budget provided that clarity and the tracing mechanism through TDS was also provided,” he added. .

The budget proposed a 30% tax on income from transactions in these assets and a 1% TDS (withholding tax) on transactions in these asset classes above a certain threshold to trace The source.

Gifts of crypto and digital assets would also be taxed, the budget said.
Currently, there are no special regulations or bans on private cryptocurrency trading in the country.

The government had in December expressed its intention to introduce a Cryptocurrency Bill aimed at “creating a framework to facilitate the establishment of the official digital currency to be issued by the Reserve Bank of India” during the last session of Parliament. .

However, it could not be introduced because the Cabinet had not approved the bill.

The RBI has been vehemently opposed to private cryptocurrencies as they could have national security and financial stability implications.

According to a survey, central banks, faced with the decline in the use of paper money, are seeking to popularize a more acceptable form of electronic money (like Sweden). Additionally, jurisdictions with a high use of physical cash are looking to make issuance more efficient (such as Denmark, Germany, Japan, and the United States).

Even the RBI is of the view that globally coordinated action is needed and central banks should come up with digital currencies to meet the needs of the public and prevent any harm from the use of private virtual currencies.