In a written reply in Parliament on Monday, Union Minister of State for Finance Pankaj Chaudhary said that any legislation to regulate or to ban cryptocurrencies and non-fungible tokens (NFTs) can be effective only after significant
international cooperation on the evaluation of risks and benefits and the development of common taxonomy and standards. “Cryptocurrencies are unregulated in India. Cryptocurrencies and non-fungible tokens (NFTs) are by definition borderless and require international cooperation to prevent regulatory arbitrage,” the minister said.
Last week, Finance Minister Nirmala Sitharaman also made a similar statement in Parliament that “global cooperation” would be needed to effectively ban cryptocurrencies and digital assets, which has sent positive signals to several stakeholders in the industry.
That effectively means the government can’t ban digital assets anytime soon. However, some experts claim that the finance minister just stated a fact about the international nature of cryptocurrencies and the negative sentiments surrounding the digital assets.
In a response to the assessment of crypto and non-fungible tokens (NFT) as assets of the country by the government, the Ministry of Finance said that the term “Crypto” is not defined in the Income Tax Act, 1961 (the Act). ). “However, through the Finance Act, 2022, clause (47A) was inserted in Section 2 of the Act to provide definition of Virtual Digital Asset (VDA) to mean information or code or number or token (not Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name, provides a digital representation of value exchanged with or without consideration, with the promise or representation of having intrinsic value, or acts as a store of value or unit of account including use in any financial transaction or investment; but not limited to investment scheme, and may be transferred, stored or traded electronically. Non-fungible token and any other token of similar nature are included in the definition,” the statement said.
Purushottam Anand, founder and CEO of Crypto Legal, a law firm, decoded the recent statement from the Ministry of Finance that the government’s response regarding any plans to ban the trading and holding of cryptocurrencies and NFTs suggests that it is unlikely to ban cryptocurrencies anytime in the future until a considerable international cooperation is realised. “The government has recognized the borderless nature of VDAs and the importance of international cooperation, suggesting that India, unlike China, will not move ahead with banning VDAs in the country if global regulatory sentiment happens to favor regulation over prohibition ,” he said.
