India backs blockchain but insists digital currency should be regulated: Nirmala Sitharaman

India has maintained its stance that the government should regulate digital currencies to prevent a repeat of industry-wide implosions in 2022.

The country’s finance minister, Nirmala Sitharaman, revealed this at a conference in Bengaluru, where she pointed out that without government control, investors will bear the brunt of the collapse. Sitharaman clarified that despite the tough stance, the government will continue to support blockchain technology for other use cases.

BREAKING🚨: India’s Finance Minister 🇮🇳, Smt. Nirmala Sitharaman, says we are not against technology, but when it applies #Crypto or currency, it must be run by either the government or the central bank. Otherwise, there will be more events such as FTX.

1/2 pic.twitter.com/v4aqn5pJHw

— KoinX (@getkoinx) 7 May 2023

“Blockchain gives us so many options,” Sitharaman said. “It can be used in so many different ways. So we are not against the technology.”

The Indian government has shown its support for blockchain in several ways, including launching a learning module under the auspices of the National Institution for Transforming India (NITI) Aayog designed to deepen the talent pool. In 2022, the finance minister stated that the country will achieve blockchain adoption rates of 46% in the next few years.

The Reserve Bank of India (RBI) has already turned to blockchain for its central bank digital currency (CBDC) pilots. The minister told the participants that the proposed digital rupee could potentially reduce transaction costs and times for cross-border payments while reducing arbitrage-related losses to the barest minimum.

India’s stance on digital currency has earned the country a reputation for being one of the most challenging in the world, characterized by a tough tax regime for the asset class. Indian investors are expected to pay 30% tax on digital assets and an additional 1% tax deductible at source (TDS) on certain transactions.

“But on virtual currency, we think it has to be run by either the government or the central bank,” Sitharaman said. “Otherwise, it could be like those that have collapsed, causing huge spillover effects worldwide, like FTX.”

Tightening the noose around digital currencies

Unsatisfied with the current tax regime for digital currencies, Indian regulators upped the ante by preventing investors from offsetting losses against gains and raising interest rates for late payment of taxes. Apart from incurring 30% interest on late payment, defaulters also face the grim prospect of up to six months in jail.

India hopes to lead the charge for a global regulatory framework for digital currencies, using its position as G20 president to push for change. Sitharaman revealed that plans are already underway with central banks and finance ministers cross-pollinating ideas for draft rules.

“Global order has become so interconnected that one country taking any step in regulating cryptoassets will be ineffective because the technology does not care about borders or boundaries,” Sitharaman said.

India will be the largest blockchain nation in 5 years: IPv6 Forum’s Latif Ladid

width=”560″ height=”315″ frameborder=”0″ allowfullscreen=”allowfullscreen”>

New to Bitcoin? Check out CoinGeeks Bitcoin for beginners section, the ultimate resource guide for learning more about Bitcoin – originally envisioned by Satoshi Nakamoto – and blockchain.