The Indian finance minister Nirmala Sitharaman has stated that the government will soon take a step to legalize cryptocurrency. It’s estimated that the move to comply with the Financial Action Task Force (FATF) will happen in the first quarter of 2023. The official Indian digital currency (e-rupee) will mirror any privately owned electronic wallet companies with sovereign backing.
The Launch of the Indian e-rupee in Early 2023
When presenting her budget speech, the minister broke the news about launching the Indian digital rupee. Although she acknowledges that digital currency has underlying risks and can’t be rushed, the government will regulate the crypto sector. She reiterated that the Indian government supports technology like other countries and intends not to hurt innovation. Cryptocurrencies might be new to you, but others are learning more about them on cryptogorilla.com and making a kill out there.
The risks associated with crypto in India directly reflect a global trend that comes into play with an increase in the asset class. In 2021, virtual asset crimes hit the roof, with unlawful addresses receiving $14 billion. This figure increased from $7.8 billion in 2020, which isn’t strange because more than 9.6 million Indian users visited crypto scam sites.
As India prepares to launch its Central Bank Digital Currency (CBDC) in the first quarter of 2023, the deputy governor, Reserve Bank of India (RBI) said the digital rupee is coming. However, he agrees that the move would not be rushed, but they’ll roll it out from the pilot plan and then gradually move to other segments. Implementing the wholesale part will make the process easy to execute, as other bits are technology-intensive, meaning they might need more time and know-how.
Cryptocurrency Performance in Asia
India takes the frontline in executing technological innovations, but it’s different from cryptocurrencies. This lag has left many wondering why the country is behind its Asian peers in implementing the digital currency, despite taking the 21st position with a gain of $1.85 billion. Other countries that performed better are Turkey, at position six with a profit of $4.6 billion, while Vietnam claimed the 16th position with $2.7 billion.
China had a crackdown on the cryptocurrency sector last year, but was still ranked among the top five best performers with a gain of $5.1 billion. The country witnessed a year-on-year drop increase of 194% when compared to the US and the UK. It’s encouraging to show that the industry is lucrative. The CEO of BuyUcoin, Shivam Thakral, echoes the outstanding global performance of the digital currency. Further, he praises stakeholders who take the bold step to invest in crypto assets. He feels that India’s crypto gains are lucrative, despite that the industry still faces regulatory uncertainty.
When you compare different crypto gains, Ethereum is the top performer at $76.3 billion, with bitcoin coming second at $74.7 billion. This clearly reflects the surge in demand for Ethereum over bitcoin. The most significant Ethereum boost was in 2021 when the DeFi protocol was built based on the Ethereum blockchain, hence using it as the primary currency.
India’s Compliance with FATF on Cryptos
The Indian government is doing the final touches on legalizing cryptocurrency to pronounce its stance on the FATF early in 2023. Following the views sent to the Economic Affairs by the Revenue Department, they’re waiting on the response to determine the legality of cryptocurrency. The FATF carries intense countrywide evaluations on the execution and efficiency of methods to curb crimes like money laundering, which are the main risks of digital currencies.
Although cryptocurrencies are already being taxed, their legality is still questionable until the government takes a stand. Therefore, the government must respond to the lawfulness of cryptos to the FATF by May. Moreover, a Financial Stability Board (FSB) detail will be tabled this October to help the Indian government make the right decision.
Following the meeting, the Indian government will decide if to impose a ban on cryptocurrency trade or lay down a legal framework for dealing with digital money. Depending on the FSB report, clear guidelines on whether digital wallets are legal will dictate how crypto transactions will be treated. Although the legislation of cryptos is still a work in progress, they were taxed for the 2022 budget, meaning it’s a great contributor to the economy.
Currently, India isn’t FATF compliant concerning crypto assets. This is because the global watchdog for money laundering and terrorist financing demands that a country has a pronounced stance on the legality of crypto assets for compliance.
A meeting between the Indian Finance Minister Nirmala and the Financial Stability and Development Council (FSDC) stressed the urgency to take a stand on the legality of cryptocurrencies. Besides, she also asked the director of the International Monetary Fund (IMF), Kristalina Georgieva, to also take a lead in helping regulate crypto assets globally.
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