A year after India’s G20 Presidency, the nation’s crypto regulation ambitions remain unfulfilled, even as global peers forge ahead with robust frameworks for virtual digital assets (VDAs). Despite leading the G20 in 2023 and making bold commitments to regulate the crypto space, India’s inaction starkly contrasts with the proactive measures taken by other nations, highlighting an urgent need for a coherent regulatory strategy.
While India stalls, other G20 countries have advanced their regulatory efforts significantly:
- Argentina enacted a tax amnesty law in June 2024 to integrate crypto into its tax framework, aiming to attract investments.
- Brazil is set to introduce stablecoin and asset tokenization regulations in 2025, complemented by enhanced systems to monitor crypto activities.
- Australia has introduced the Digital Assets (Market Regulation) Bill and plans to formalize stablecoin frameworks by 2025.
- The European Union, with its Markets in Crypto-Assets (MiCA) framework, has set a global standard, while France has tightened licensing norms, attracting global stablecoin issuers.
In the UK, a phased regulatory roadmap emphasizes consumer protection and oversight, with milestones extending to 2026. Nations like Germany, Italy, Canada, and Indonesia are aligning with international standards, adding insolvency safeguards, and transitioning oversight to securities authorities for stricter compliance.
East Asia continues to lead the crypto revolution. Japan has rationalized taxes and encouraged Web3 technologies, while South Korea’s Virtual Asset User Protection Act, effective since July 2024, provides a comprehensive legal framework. Even South Africa, traditionally cautious, has implemented anti-money laundering (AML) rules and plans to regulate stablecoins.
Russia, responding pragmatically to economic challenges, has legalized crypto mining and allowed international payments in cryptocurrency. These initiatives illustrate a global trend toward regulatory alignment and innovation, leaving India isolated in its indecision.
As the International Monetary Fund (IMF) and Financial Stability Board (FSB) Roadmap call for global unity on crypto regulation, India’s delay could harm its credibility. Aligning with FATF Recommendation 16 and ISO 20022 standards is crucial for transparency and interoperability, yet India risks being marginalized in an interconnected financial ecosystem.
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Although India announced a Discussion Paper on crypto during its G20 Presidency, the lack of progress highlights concerning policy inertia. The absence of prudential norms and licensing frameworks hampers investor protection, innovation, and foreign investment in its burgeoning digital economy.
India’s inaction risks not only reputational damage but also missed economic opportunities in the rapidly evolving crypto space. Implementing a comprehensive regulatory framework is imperative to secure its place in the global financial landscape and protect its growing digital economy.
