Finance Ministry Financial News

India has said it wants a collective global effort to deal with problems posed by cryptocurrencies such as bitcoin, and the finance ministry said it had held a seminar for G20 member states to discuss how to come up with a common framework. Speaking to Reuters on the sidelines of the G20 meeting in Bengaluru, U.S. Treasury Secretary Janet Yellen said it was «critical» to put in place a strong regulatory framework but added that the United States had not suggested any outright bans. «We haven't suggested outright banning of crypto activities, but it is critical to put in place a strong regulatory framework,» Yellen said. «We're working with other governments.»

IMF) and the Financial Stability Board (FSB) has set out a roadmap to coordinate measures to stop crypto assets from undermining macroeconomic and financial stability. However, the synthesis, put together at the request of the Indian G20 presidency, stopped short of endorsing a blanket ban on such assets, saying it can be “costly and technically demanding to enforce”. The crypto asset regulation is a key part of the agenda for G20 leaders when they meet in New Delhi this weekend. The IMF-FSB Synthesis Paper: Policies for Crypto-Assets provides comprehensive guidance to address the macroeconomic and financial stability risks posed by crypto-asset activities and markets, including those associated with stablecoins and those conducted through so-called decentralised finance (DeFi).

Crypto exchanges and intermediaries dealing with virtual digital assets will now be required to perform KYC of their clients and users of the platform. The Finance Ministry on March 7 notified that entities dealing in virtual digital assets (VDAs) will now be considered 'reporting entity' under the Prevention of Money Laundering Act (PMLA). Entities involved in the exchange between VDAs and Fiat currencies or transfer of VDAs or safekeeping and administration of VDAs, and participation in financial services related to an issuer's offer and sale of a VDA would be 'reporting entity' for the purpose of the PMLA. Under the anti-money laundering law, reporting entities are required to maintain KYC details or records of documents evidencing the identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients.

The Reserve Bank of India (RBI) has recommended to the government that it should frame regulations for cryptocurrencies and prohibit them.

ODI) route to bet on cryptocurrencies abroad with the liberalised remittance facility (LRS) — the customary window for offshore investments by wealthy residents — shut for these exotic digital assets. These ultra-high net worth individuals are using a non-banking finance company — preferably an existing local entity — to sponsor an overseas investment company, a wholly-owned subsidiary, in a financial centre like Dubai. The funds used to capitalise this foreign arm is invested in securities and assets abroad, including cryptos sold on trading platforms outside India. «Unlike the LRS Scheme which restricts direct investment in the financial services sector overseas, the ODI scheme permits regulated financial services companies to invest in the financial services sector under approval route. Such investment is subject to prior approval from the relevant financial regulators in India and overseas. Once a duly approved overseas direct investment is made in a financial services company overseas, such entity should be able to undertake business in accordance with the laws applicable in the relevant overseas jurisdiction,» said Moin Ladha, partner at the law firm Khaitan & Co.

The Reserve Bank of India (RBI) has not proposed any mechanism for the trading of crypto assets, Minister of State for Finance Pankaj Chaudhary said in Parliament on March 21.

Mumbai: The crypto industry has reached out to the finance ministry, seeking to either reduce or eliminate the 1% tax deducted at source (TDS) proposed on the proceeds of all crypto transactions, as the Finance Bill will be approved in the Parliament session that commenced Monday. Top crypto players are taking up the demand with the ministry through the Blockchain and Crypto Assets Council (BACC), which is part of the Internet and Mobile Association of India, and startup industry body IndiaTech. According to two people ET spoke to, these crypto platforms that are members of the BACC have recommended that the proposed TDS be reduced to 0.01-0.1%.

Days after the 2022 Union Budget proposed a 30 percent tax on the sale or purchase of virtual digital assets like cryptocurrencies, the Indian crypto industry plans to seek a revision of the rate from the government.

By Abhijit Roy Chowdhury and Shruti Srivastava India is considering appointing its capital markets regulator to oversee cryptocurrencies, according to people with knowledge of the matter, as authorities look to classify them as financial assets.