IndiaTech.org, an industry association representing India’s technology start-ups, unicorns and investors to build a positive business and conducive policy and regulations, released a policy proposal framework on Wednesday to regulate crypto in India. This is a step towards providing clear definitions for the cryptocurrency industry.
The association released a white paper including a policy proposal that has recommendations for a regulatory framework for crypto-assets and crypto exchanges in India.
The value of crypto assets worldwide crossed US$ 2 trillion earlier this year. With crypto gaining huge popularity, its global adoption is increasing as technology innovation in this space accelerates further. Even businesses have started to adopt crypto for transfers, remittances, trading, lending, crowdfunding etc.
However, India has rather been taking a cautionary approach towards crypto from the beginning. The Reserve Bank of India initially viewed cryptocurrencies as a potential threat to its legal tender and an avenue for potential misuse that may not have an audit trail. On the other hand, there are many countries that have moved ahead by considering crypto as a digital asset and have come up with ways and policies to regulate this class of digital assets.
The IndiaTech association has proposed a 5-point framework to regulate this industry while fostering innovation. The framework essentially suggests to define, introduce, enable, allow and encourage necessary checks and balances on crypto to explore its potential with the means of necessary regulations. The 5 points are –
1. Define crypto assets and also introduce a system for registering local homegrown crypto exchanges in India.
2. Introduce sufficient checks and balances through well-defined reporting mechanisms, accounting standards and mechanisms to counter suspicious activities 2 and/or transactions, enable traceability and combat Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT)
3. Enable taxation (Direct and Indirect) to treat crypto assets just as other current assets (but not cash), permit disclosures and regulate import which would result in additional revenue generation
4. Allow innovative uses of crypto by businesses and create specific safeguards to protect retail investors from token issuance
5. Encourage self-regulation for the industry to adhere to the defined code of conduct carved out under such a self-regulatory model which would be framed in alignment with the government’s primary objective of safeguarding consumers as well as financial stability.
The above 5-points have been explained in more detail in the white paper.
IndiaTech CEO Rameesh Kailasam said, “The crypto industry holds huge potential for Indian startups. The foremost need today is for this sector to be granted the much-needed regulatory clarity that it has been seeking. We are hopeful that the Government will work with the industry to regulate the sector and that a progressive approach is adopted while doing so.”
Sumit Gupta, co-founder and CEO of crypto exchange CoinDCX said, “This effort by the IndiaTech team is truly commendable. It helps bring a fresh perspective to the regulatory discussions that are going on today. The recommendations if accepted will open the immense potential for Indians to participate in this new global asset class.”
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