No timeline fixed for Virtual Digital Assets regulation, says MoS Finance

The Minister of State for Finance Pankaj Chaudhary today informed the Lok Sabha that the government does not register cryptocurrency exchanges and global cooperation key to regulating cryptocurrency

 

On Monday, the Minister of State for Finance, Pankaj Chaudhary, told the Lok Sabha that no specific timeline has been finalised by the Central Government for the comprehensive regulatory framework for Virtual Digital Assets (VDA) in India.

 

Responding to questions put by two Members of the Parliament on the steps for a regulatory framework and time frame, Chaudhary mentioned that VDAs, by nature, are borderless, and hence international cooperation is essential to avoid regulatory arbitrage.

 

He clarified that the Indian government does not register cryptocurrency exchanges and reiterated the need for global cooperation to effectively regulate crypto assets. Any comprehensive framework for VDAs would require significant international alignment, he mentioned.

 

Introduction of Virtual Digital Assets 

In March 2023, the government brought VDAs under the ambit of the ‘Prevention of Money Laundering Act, 2002 (PMLA)’, ensuring that transactions involving these assets fall within its scope. Income generated from VDAs is also taxable.

 

While in its G20 Presidency in India, the International Monetary Fund (IMF), as well as the Financial Stability Board (FSB), presented their synthesis paper following a discussion regarding the adoption of a ‘G20 Roadmap on Crypto Assets’. These contain risks specific to the Emerging Market and Developing Economies (EMDEs). 

 

The Minister of State for Finance told the lower house that all jurisdictions would be expected to assess specific risks and interact with the standard-setting bodies and G20 to identify appropriate steps for managing crypto assets in India.

 

The minister further clarified that it consults stakeholders, such as industry players and international organisations, both formally and informally, to frame policies related to crypto assets. He, however, said that no timeline has been set for the introduction of a comprehensive regulatory framework for the VDA industry.

 

What are Virtual Digital Assets? 

Virtual Digital Assets (VDAs) are electronically stored, transferable, or tradable digital representations of value. They include: 

 

Cryptocurrencies: Digital or virtual currencies that are secured through cryptographic techniques, making them highly resistant to counterfeiting.

 

NFTs (Non-Fungible Tokens): Unique digital assets, recorded on a blockchain, and tradable for money, cryptocurrencies, or other NFTs.

 

Other tokens: Digital tokens that are similar to NFTs.  

 

VDAs can be used for payments, investments, or as representations of real-world items such as artwork, real estate, personal identities, or property rights.

 

The Indian Income Tax Act defines VDAs as any data, code, number, or token that can be electronically transferred, stored, or traded. However, the government has reserved the right to classify additional assets as VDAs or exclude certain assets from this definition.