In a recent interview with Moneycontrol, Indian Economic Affairs Secretary Ajay Seth announced that India will unveil a discussion paper on cryptocurrency regulation before September 2024. This paper aims to initiate stakeholder consultations rather than propose immediate legislation.

An inter-ministerial group, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is spearheading this initiative. The RBI favours a ban on cryptocurrencies due to macroeconomic risks, while SEBI is open to regulation.

This move builds on a September 2023 commitment to analyze global approaches before finalizing India’s stance. The government has already imposed significant taxes on crypto transactions and mandated registration with the Financial Intelligence Unit.

Complicating the regulatory landscape, the Narcotics Control Bureau (NCB) has intensified its scrutiny of crypto payments on the darknet to combat drug trafficking. Minister of State for Home Affairs Nityanand Rai introduced a 13-point strategy to address these issues, including forming a Special Task Force on Darknet and Cryptocurrency.

These measures highlight India’s challenge in balancing economic benefits with the need to curb illegal activities. The forthcoming discussion paper will reflect these complexities, seeking a comprehensive approach to cryptocurrency regulation.