India discusses crypto, regulation with G20, says finance minister

As India moves forward with its one-year presidency of the Group of 20 (G20), it is discussing cryptocurrency and regulation with the group’s members, India’s Finance Minister Nirmala Sitharaman said.

See related article: India’s CoinDCX exchange says crypto tax rules reduce government revenue

Fast facts

• “Whether it is crypto-mining, asset or transaction, we realize that it is completely driven by technology and an independent country’s effort to control and regulate it will not be effective,” Sitharaman said on Monday in response to a question in the lower house of parliament.

• “In the G20 we take it up and have detailed discussions with the members so that a standard operating protocol emerges resulting in a coherent, comprehensive approach where all countries work together to bring about some regulation,” Sitharaman said.

• India assumed the presidency of the G20 from December 1 to November 30, 2023, and is likely to hold over 200 meetings across the country.

• India’s cryptocurrency and Web3.0 industries have pinned their hopes on these discussions as they await clarity on this nascent asset class.

• “India needs strong crypto regulations more than any other nation in the world as we are witnessing mass adoption of digital assets in India at an exponential rate,” said Shivam Thakral, co-founder of crypto exchange BuyUcoin, in a statement shared with Discard.

• The G20 discussions are important as India has long viewed digital assets with suspicion, going so far as to impose a 30% flat tax on all crypto income and a 1% tax deducted at source (TDS) on all crypto trades above 10,000 Indian rupees (US$120).

• India also does not allow crypto traders to offset losses against gains, and has ignored industry requests to lower taxes on cryptocurrency trading. According to the Esya Centre, a technology policy think tank in India, around $3.8 billion may have moved to offshore crypto exchanges from India between February and October 2022, as traders tried to avoid paying the tax levies.

• Almost as a reaction to deter tax evasion, Sitharaman has introduced a penalty equal to TDS for non-deduction, interest of 15% annually for late payment, and even imprisonment, crypto tax firm KoinX explained on Twitter.

• “While the current Indian environment may seem unfavorable to crypto institutions, it is definitely a start where the government is actually recognizing crypto and digital assets,” said Dhruvil Shah, senior vice president of technology at Liminal, a digital wallet platform. However, a one-size-fits-all policy may not work for India’s diverse digital asset industry, Shah said in a statement shared with Discard.

• See related article: The last 12 months of the year to forget, says India’s WazirX crypto exchange