FM Nirmala Sitharaman says crypto assets cannot be currencies

The Web3 industry in India is currently under regulatory safeguards, and the government is gradually deploying rules to protect the finances involved in the digital asset industry. Finance Minister Nirmala Sitharaman was asked about India’s stance on cryptocurrencies on Friday. Sharing her response, the minister said that cryptocurrencies are not regarded or viewed as “currency” in India.

Sitharaman was speaking at the India Today Conclave 2024 on Friday, when she was asked whether the recent bull run in the cryptocurrency industry has prompted the government to consider the place of cryptocurrencies in the Indian financial sector.

Sitharaman while answering a question It is said Its (government’s) position has always been that assets created in the name of cryptocurrencies can be assets used for trading, assets used to make money and assets used for many other purposes. We had no regulation then and we have no regulation now. But they cannot become currencies, which is the position of the Indian government. “

Sitharaman’s statement comes at a time when the cryptocurrency industry is on an upward trajectory. Bitcoin prices surged to an all-time high of over $73,700 (roughly Rs. 61 lakh) this week as funds flowed into BTC via US-approved ETFs. The most popular cryptocurrency is following in the footsteps of BTC in its surge, taking the cryptocurrency market capitalization to over $2.7 trillion (roughly Rs. 22,378,585 crore).

With features such as instant settlement of large payments, cheap cross-border remittances, anonymous transactions, and support for tokenization, the cryptocurrency industry offers investors several reasons to consider it an alternative to traditional markets.

In fact, earlier this week, the Chairman of the Securities and Exchange Board of India (SEBI) cited some of these cryptocurrency characteristics when addressing the concerns of potential investors switching from traditional market sectors to options such as cryptocurrencies.

However, India’s finance minister remains unfazed by the developments currently shaping the cryptocurrency industry. She also explained why the government drafted a cryptocurrency roadmap for G20 countries last year during its G20 presidency.

“The currency will be issued based on the decree of the government or the central bank of the day. And it remains unregulated in India. If one country regulates it and other countries don’t, then it becomes a simple transfer of funds, round trip, funding way of drugs and even terrorism. That is why we thought it would be appropriate to raise this issue at the G20 forum because it is technology driven and it will have an impact on cross-border payments,” Sitharaman reportedly added.

With the support of blockchain technology, cryptocurrencies such as Bitcoin and Ethereum are digital assets with financial value. Currently, trading and holding cryptocurrencies is not illegal in India. Companies operating in the cryptocurrency industry must comply with anti-money laundering laws and KYC requirements to ensure that cryptocurrency funds are not misused for illegal activities.

To provide some level of tracking on these largely anonymous cryptocurrency transactions, the country’s current tax policy requires a TDS of 1% per cryptocurrency transaction. The country also imposes a 30% tax on cryptocurrency profits.