India may soon provide a regulatory framework for its troubled digital assets industry. Ajay Seth, the country’s economic affairs secretary, has revealed that the government will soon finalize a consultation paper for digital currency regulations.
According to a Financial Times of India report, Seth revealed this while speaking at an event organized by the Finance minister. He disclosed that the paper would be one of the most comprehensive consultations India has conducted for digital currency regulation so far.
The paper is a result of consultations made both with key local digital currency industry players and international organizations like the International Monetary Fund (IMF) and the World Bank.
“We have consulted not just the domestic institutional stakeholders but also organizations like the IMF and World Bank. So we hope that we will soon be in a position to finalize our consultation paper,” he said.
He adds that the paper will look beyond just regulating digital currencies in India. It is part of wider plans to establish a global consensus on digital currency regulations.
India’s digital currency regulatory climate leaves a lot of uncertainty
The development is a positive one for the digital assets industry in India as it gives some hope that an outright ban is not likely. The Indian government has already caused uncertainty among local digital assets investors and firms with its indecisive stance on the industry.
Despite a tax regime for digital assets introduced by the Minister for Finance, several officials have talked of banning digital currencies. Finance Minister Nirmala Sirtharaman has stated that India will not rush into regulating digital assets.
Recent remarks by the Reserve Bank of India (RBI) indicated that the country is still highly skeptical of digital currencies. The central bank’s officials stated that digital currencies would ultimately dollarize the country’s economy at their current rate of adoption.
Meanwhile, the government has also strongly backed plans to issue a CBDC. In its annual report, the RBI listed the introduction of a CBDC as one of its major initiatives for the 2022-23 fiscal year.
For its part, the IMF, one of the international bodies that India is consulting for the paper, has encouraged digital currency regulations to continue to be rolled out. Head of the IMF, Kristalina Georgieva, stated that despite the risks posed by stablecoins, digital currencies still hold a lot of potentials.
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