Crypto Players See Light at the End of the Tunnel Despite Regulatory Vacuum, Here’s Why

The Finance Ministry recently made it clear in a written reply in the Lok Sabha that the government is not considering enacting a law to regulate cryptocurrency transactions.

“Currently, there is no proposal to introduce legislation to regulate the sale and purchase of virtual digital assets in the country,” Pankaj Chaudhary, Minister of State (MoS) in the Ministry of Finance, said in a written reply to the Lok Sabha.

It is worth noting that this is not the first time the government has avoided answering the question of whether it intends to establish a regulatory framework for cryptocurrencies.

Finance and Corporate Affairs Minister Nirmala Sitharaman recently stated that a global agreement on cryptocurrencies is needed and that merely one country introducing regulation will not bring about much progress in regulation.

In November 2021, Sitharaman — in response to a question on Bitcoin in Parliament — said the government had no proposal to recognise Bitcoin as a currency.

What do industry representatives think?

However, cryptocurrency industry representatives are not too pessimistic about Chaudhary’s statement, which was issued at the request of the Ministry of Finance, as they are pinning their hopes on a consultation paper on digital currencies that is likely to be published next month.

“The Secretary, Department of Economic Affairs (DEA), had suggested just a few weeks ago that the discussion paper would likely be released by September 2024. We remain optimistic and are eagerly awaiting the paper to better understand the potential next steps for the virtual and digital assets (VDA) sector in India,” says R Venkatesh, Vice President and Head of Public Policy at CoinSwitch.

Similarly, Dilip Chenoy, Chairman, Bharat Web3 Association, also saw hope in the recent comments by the Secretary, Department of Economic Affairs, on the upcoming VDA policy discussion paper. “We look forward to examining the paper in detail once it is released for public consultation and providing our input on the policy. We commend India’s leadership during the G20 presidency last year in building consensus on crypto asset policy and adopting the G20 Crypto Asset Roadmap,” Chenoy said.

“We urge the government and regulators to take the lead in developing a comprehensive regulatory regime for Web3/VDA in India,” he added.

CoinDCX declined to comment on the matter.

It is worth noting that the G20 finance ministers in October 2023 adopted a summary document published a month earlier by the IMF-Financial Stability Board (FSB).