RBI not proposed any Mechanism for Trading of Crypto Assets Yet

The Reserve Bank of India (RBI) has not proposed any mechanism for trading of crypto assets, Minister of State for Finance Pankaj Chaudhary said in Parliament on March 21.

In an Unstarred Question & Answered Session in Lok Sabha, Questioned to Minister of Finance to state her view on following matter:-

(a) whether the Reserve Bank of India(RBI) has proposed any mechanism for trading of crypto assets and if so, the details thereof;

(b) whether the Government proposes to define cryptocurrencies as securities or other f mancial instruments;

(c) if so, the details thereof;

(d) whether the Government has undertaken any steps to formulate transparent, regulatory measures for digital currencies/cryptocurrencies rather than the intended banning; and

(e) if so, the details and the status thereof including the details of protection for investors that the same will involve?

Replying to questions, Minister of State for Finance Pankaj Chaudhary response:

No Sir, no mechanism proposed for trading of crypto assets yet.

Cryptocurrency sector is unregulated. The legal framework for the sector may be finalised only after all aspects are carefully examined in consultation with stakeholders concerned.

RBI has been cautioning users, holders and traders of Virtual Currencies (VCs) vide public notices on December 24, 2013, February O1, 2017 and December 05, 2017 that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks. RBI vide its circular dated May 31, 2021 has also advised its regulated entities to continue to carry out customer due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT), obligations under Prevention of Money Laundering Act (PMLA), 2002, etc.

While the Union Budget 2023 recommended a 30% tax on profits made from the sale of all crypto assets, with a 1% tax deducted at the point of sale, the government has yet to take a position on the issue.

Even Finance Minister Nirmala Sitharaman was asked if she saw a future for cryptocurrency in India at the India Global Forum earlier this month. She did not, however, directly answer the issue, instead eliciting amusement with her tongue-in-cheek statement that “Many Indians envision a bright future for it. As a result, I see revenue potential in it”.

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