Raghav Chadha, a member of India’s upper chamber of Parliament, urged the government to establish a regulatory framework for cryptocurrencies and stablecoins in the country.
India’s Crypto Policies Under Scanner
In a speech in the Parliament on Monday, Chadha highlighted what he viewed as the paradox of taxing cryptocurrency gains at 30% without legal recognition, investor protections, or anti-money laundering frameworks.
“India taxes VDAs [virtual digital asset] like they are legal. But regulates it like they are illegal,” Chadha said.
Can Clear Regulations Unlock Billions?
India imposes a 30% flat tax on income from the transfer of virtual digital assets, including cryptocurrencies and non-fungible tokens. The 30% tax applies regardless of holding period or income slab. In addition, a 1% tax is deducted on all transfers, including sales.
An analysis by KoinX, a cryptocurrency tax accounting platform, found 72.66% of India’s cryptocurrency trading volume, worth roughly $5.60 billion, occurred on offshore platforms. Chadha also referenced these numbers, adding that unclear regulations have forced as many as 180 cryptocurrency startups to move abroad.
The lawmaker underscored the need for a “clear domestic regulatory sandbox” that would grant cryptocurrencies “asset class status” in the country. He said that doing so would add billions in annual tax revenue to the government.
“Let us not fear innovation, let us regulate it. Prohibition is not protection, Regulation is protection,” Chadha stated.
India’s Ministry of Finance didn’t immediately return Benzinga’s request for comment.
India Says No To Stablecoins
The Indian government has postponed discussions on a cryptocurrency bill first announced in 2021. Noting the delay, the country’s Supreme Court pulled up the government, calling the absence of clear crypto guidelines “unfortunate.”
In December, T. Rabi Sankar, Deputy Governor of the RBI, ruled out the need for stablecoins in the country as they don’t fit the definition of “sovereign currencies,” as reported by The Hindu.
Sankar previously noted that most stablecoins are pegged to the U.S. dollar or European currencies, and in a country like India, they could lead to dollarization and dwarf the usage of the Indian Rupee.
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