Over the years, India has maintained a hot-and-cold relationship with digital assets, especially cryptos. In 2018, the country effectively banned crypto transactions, but the Supreme Court struck down the restriction in March 2020.
Calls for sterner rules have, however, grown since then. Leaving behind investors’ concerns, the nation imposed a 30% flat tax on crypto income and digital asset investments a few weeks back. In fact, a few ministers want the number to be further increased because 30%, apparently, doesn’t matter for people who earn via crypto trading/investing.
Finance Minister Voices Out Crypto Concerns On Int’l Stage
Amidst the overheated anti-landscape, Union Finance Minister Nirmala Sitharaman expressed her concerns with respect to this comparatively novel asset class. On the international stage, at an IMF meeting on 18 April, she said that the biggest risk associated with crypto is its possibility to be used for money laundering and terror financing.
“The biggest risk for all countries across the board will be the aspect of money laundering and that of such currency being used for financing terror.”
Sitharaman added,
“I think regulation using technology is the only answer. Regulation using technology will have to be so adept, that it has to be not behind the curve, but be sure that it is on the top of it. And that’s not possible if any one country thinks that it can handle it. It has to be across the board.”
At the panel discussion on “Money at a Crossroad” hosted by IMF managing director Kristalina Georgieva on the first day, the Minister went on to highlight India’s performance in the digital world and the Government of India’s efforts to build a digital infrastructure framework over the last decade. She also brought to light the increase in the digital adoption rate in India during the COVID-19 pandemic phase.
“If I use 2019 data, the digital adoption rate in India is about 85%. But globally, it was only somewhere near 64% the same year. So the pandemic time actually helped us to test and prove for ourselves that it is simple to use, common people can use it, and adoption actually was proven.”
Leaving aside the adoption numbers, it is worth recalling here that the minister had clarified in March that India was not shutting off all options when it came to cryptocurrency or blockchain and fintech. Sitharaman had said that a Cabinet note was being prepared on the matter that would provide all details on the formulation of cryptocurrency regulations in India.