‘Consultation paper on crypto ready’ says DEA secretary; what to expect 

Economic affairs secretary Ajay Seth said on Monday that the government's consultation paper on cryptocurrency is finished and will be presented soon. 

"Our consultation paper is fairly ready. We have gone into a deep dive in this. We have consulted not just the domestic institutional stakeholders but also the World Bank (WB) and International Monetary Fund (IMF). We will soon be in a position to finalise our consultation paper," Seth said on the sidelines of a finance ministry press briefing. 

Here is what the industry insiders and experts think about this development. 

Sharat Chandra, crypto expert and vice president, Research and Strategy at  EarthID told Business Today that the paper has been drafted after due consultation with all stakeholders and will clarify the government’s stance on cryptos assets. 

He said, “The Standing Committee of the Ministry of Finance has engaged with crypto stakeholders. The crypto consultation paper can shed light on the government's approach to compliance enforcement.“ 

Chandra also said that the paper should better highlight the distinction and treatment of different types of crypto assets and their treatment. Chandra said, “Industry stakeholders have been vocal about the rationalization of crypto taxation. The government should further classify virtual digital assets(commodities, assets, etc) and define guidelines for appropriate tax treatment with respect to goods and services tax and income tax act.” 

Speaking on behalf of EasyFi, a DeFi platform, Anshul Dhir, COO of the platform told Business Today that this development is a step in the right direction. He said, “The industry is looking forward to this consultation paper on cryptocurrencies. We believe that this paper is a step towards creating industry-wide regulaions in the country which will have far-reaching effects for those trying to build Web3.0 businesses in India. It is our hope that the team will take into account the dynamics of new technologies like blockchain and cryptos and take global consensus towards virtual digital assets.” 

Policy think-tank founder and entrepreneur Kazim Rizvi told Business Today that a call for global consensus on the matter of crypto assets is a valid consideration and also listed reasons for the same. He said, “The call for the global consensus by the Economic Affairs Secretary on the broader framework on cryptocurrency is a legitimate concern to address issues such as money laundering, terrorism funding, tax evasion, consumer protection, and so on.” 

He also explained what is the root cause of these concerns. Rizvi said, “These issues largely stem from the immutability factor, essentially that transactions in the crypto space are final and cannot be reversed. So, solutions strengthening the crypto industry will have to act as a workaround to this central factor.” 

Finally, talking about what he expects from the consultation paper, Rizvi said, “India must take this opportunity to move towards a progressive form of regulation which protects consumers while ensuring optimal growth and innovation for the Crypto sector and the ancillary industries that will emerge around it. This will help India set an example for other countries as well that are looking to regulate this space.” 

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