Crypto Regulation: Government Response Expected Next Week, Finance Panel To Submit Report

India does not have a comprehensive regulatory framework for virtual digital assets (VDAs), although the sector is covered by taxation and anti-money laundering requirements. The government has been examining how VDAs should be dealt with as the market and related risks evolve.

Meanwhile, the Parliamentary Standing Committee on Finance has concluded its discussions on VDAs and is now awaiting the government’s response before preparing its report. The committee’s study, A Study on Virtual Digital Assets (VDAs) and Way Forward, has been under discussion for around a year.

What Has The Finance Committee Examined

The committee has been examining the treatment of VDAs through discussions with government departments, regulators, and other stakeholders. According to Parliamentary records, the panel’s recent meetings have included oral evidence from the Department of Economic Affairs (DEA), while earlier discussions involved other institutions.

Bhartruhari Mahtab, chairperson of the Parliamentary Standing Committee on Finance, said the panel has been examining the issue since last year. 

In a video shared by ANI on X (formerly Twitter), Mahtab said the committee had interacted with stakeholders, including the Reserve Bank of India (RBI) and the Central Board of Direct Taxes (CBDT). The committee’s latest discussion was a round-up session, but Mahtab said it still had certain queries on the issue. He also pointed to concerns arising from the absence of a broader regulatory framework for VDAs.

“But not regulating it also leaves greater scope for different types of indulgences. That actually is the point of concern. These are the grey areas that need to be addressed,” Mahtab said.

The committee is expecting the government’s response next week, after which it will prepare and submit its report.

What Is The Existing Crypto Regulation In India

Cryptocurrencies continue to operate in a regulatory grey area in India. Trading in crypto and other VDAs continues despite the government not introducing a comprehensive framework governing the sector.

At present, gains from VDAs are taxed at 30 per cent in India while specified crypto transactions attract a 1 per cent tax deducted at source (TDS). Crypto exchanges and other VDA service providers operating in India are required to register with the Financial Intelligence Unit-India (FIU-IND) and comply with anti-money laundering rules, which include reporting and know-your-customer (KYC) requirements.