FM Sitharaman: Regulating crypto assets on agenda for upcoming G20 meet

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on February 3 said she will be looking at arriving at a global SOP (standard operating procedure) for regulating crypto assets in her upcoming G20 meeting with finance ministers and central bank governors in a much-needed clarity on the way forward for the crypto sector.

In a post-budget interview with Network18 Group’s MD Rahul Joshi, Sitharaman said the central bank will be recognised as the authority to issue cryptocurrencies.

Sitharaman said, “We will be looking at global SOP to be available and agreed upon for regulating crypto assets while recognising the central bank as the authority for issuing cryptocurrencies.”

“The rest of the assets created outside that, are using very useful financial technologies, even those have to be discussed because regulations cannot be done by one country singularly, it has to be a collective action because technology doesn’t brook any borders,” she added talking about her agenda for the G20 meeting in Bengaluru to happen later this month.

Crypto and virtual digital asset (VDAs) industry players were left unhappy when no announcement for the sector was made during Sitharaman’s Union Budget speech on February 1. The sector was expecting some relief on the tax front especially the 1 percent tax deducted at source (TDS) on all transactions to come down to 0.1 percent. The crypto sector was also looking forward to some indications on the way ahead in terms of regulations and appointing a regulator.

On January 31, the crypto sector found a mention in the Economic Survey for the first time ever, though it was mostly to highlight the underlying risks and high volatility of the sector and the need for a global approach towards regulations.

Some of the industry players though were banking on India’s G20 presidency this year to get clarity on crypto.

Gaurav Dahake, CEO of crypto exchange Bitbns on February 1 told Moneycontrol, “The industry participants already expected this and we are also expecting to see some positive development around G20 in Q2. Since India is holding the presidency this year, crypto is one of the key themes they are working on.”

He added that the global coordination on crypto policy could lead to a uniform global taxation regime -- at least across the G20 countries.

In an update in the Finance Bill 2023, it was mentioned that non-payment of TDS of VDAs will be penalised, which would include a jail term of up to six months or a penalty of unpaid TDS amount.