India's VDA Regulatory Framework Awaits Global Collaboration

The Indian government has announced in Lok Sabha that a comprehensive regulatory framework for the Virtual Digital Assets (VDA) industry lacks an anticipated timeline. International collaboration is deemed critical to prevent regulatory evasion. As of now, VDAs fall under the Prevention of Money Laundering Act and are taxed.

In a recent session at Lok Sabha, the Indian government stated that there is no anticipated timeline for implementing comprehensive regulatory guidelines for the Virtual Digital Assets (VDA) industry. Responding to inquiries from two Members of Parliament, the government emphasized the necessity of international cooperation to prevent regulatory arbitrage due to the inherently borderless nature of VDAs.

Currently, India does not register crypto exchanges, maintaining a stance that effective regulation of VDAs hinges on significant international collaboration. As part of interim measures, VDAs were brought under the Prevention of Money Laundering Act, 2002 in March 2023, to oversee transactions using these assets.

Income generated from virtual assets is subject to taxation, and during India's G20 presidency, pivotal papers like the IMF and FSB Synthesis Paper and the 'G20 Roadmap on Crypto Assets' were adopted, urging countries to assess the risks related to crypto assets. While consultations with stakeholders and international bodies are ongoing, there is no set timeline for introducing a comprehensive regulatory framework in India, according to Minister of State for Finance, Pankaj Chaudhary.

(With inputs from agencies.)