India Calls for the Creation of Global Crypto Regulations

The Indian government recently revealed to the Lok Sabha (lower house of Parliament) that there is no set timeline for introducing comprehensive regulatory guidelines for digital assets. The statement follows questions from two Members of Parliament regarding the actions to establish a structured framework for regulating these assets and an expected timeline for implementing such policies.

In its response, the government highlighted ongoing consultations with both industry stakeholders and international organizations. The discussions conducted informally and formally underscore the belief that effective regulation of virtual digital assets (VDAs) requires global cooperation.

The government emphasized that without a coordinated international effort, regulatory arbitrage—where entities exploit differences in rules across jurisdictions—would pose significant challenges. India’s stance reflects its aspiration for globally aligned policies that address the borderless nature of crypto assets.

India has already taken steps to address some aspects of the crypto ecosystem. Income derived from VDA-related activities is subject to taxation, and since March last year, VDA transactions have been brought under the Prevention of Money Laundering Act (PMLA). However, the government reiterated that international collaboration is essential to regulate these assets effectively.

During its G20 Presidency, India adopted the “G20 Roadmap on Digital Assets,” which emphasized the need for collective action. The roadmap called on all jurisdictions, particularly emerging economies, to create risk-sensitive frameworks for regulating crypto.

Despite these efforts, challenges persist. India’s approach to regulating digital assets must strike a delicate balance between fostering innovation, safeguarding investors, and maintaining financial stability. Since VDAs operate across borders, the absence of a robust international regulatory framework leaves gaps in investor protection. The lack of a definitive timeline for domestic regulations has also created uncertainty for market participants as policymakers work to align national interests with evolving global consensus.

India’s rapidly growing crypto sector reflects both opportunity and vulnerability. The country has emerged as a leader in grassroots virtual asset adoption, attracting a wide array of users.

However, this popularity has also made the sector a target for fraudulent schemes. A recent scam in Andhra Pradesh is one example of the risks involved. Similar to other high-profile cases this year, the scheme promised attractive monthly returns and falsely claimed affiliations with reputable exchanges, drawing in investors from diverse backgrounds.

These incidents underscore the need for comprehensive regulations to protect investors and enhance trust in the sector. Without a clear regulatory framework, market participants face challenges in navigating the evolving landscape of digital assets. This same call for regulatory frameworks has been made by entities like Riot Blockchain Inc. (NASDAQ: RIOT) so that the resultant clarity can help industry actors plan better.

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