India to Invite Industry Stakeholders to Help Shape Crypto Policy in Upcoming Consultation Paper

The Indian government is drafting a consultation paper to address key crypto concerns as part of its push towards greater regulatory clarity surrounding the asset class.

According to a CNBCTV18 report on Wednesday, the Secretary of the Department of Economic Affairs is heading up a panel that is expected to publish a consultation paper, with its release slated between September and October.

The Indian government is taking steps to shore up its domestic crypto policy as it attempts to juggle innovation with regulatory oversight, inviting stakeholders to provide feedback.

During the G20 Summit last year, Indian Prime Minister Narendra Modi called for a global framework for regulating crypto, artificial intelligence, and other emerging technologies. 

It follows the country's checkered history with crypto after India's central bank banned financial institutions from dealing with the asset class in 2018. The Supreme Court overturned the ban two years later, allowing crypto trading to resume despite ongoing regulatory concerns.

Those concerns include how privately issued crypto presents a macroeconomic risk, particularly relating to stablecoins, to which the RBI has previously called for a ban against digital assets pegged to fiat currencies, such as the U.S. dollar, or commodities, including gold.

The proposed paper follows the government’s decisive action against non-compliant offshore crypto exchanges, having recently imposed bans on nine major platforms in December. Those included Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, for allegedly failing to comply with India's anti-money laundering policies.

The Financial Intelligence Unit of India enforced those bans, barring the exchanges from operating in the country. Binance, one of the largest exchanges affected, paid a fine of $2.25 million and registered with the FIU, allowing it to resume operations in the Indian market.

India’s position on crypto regulation has evolved under the influence of global developments, particularly after the Financial Stability Board integrated crypto-related policies into the G20 roadmap last year, driving efforts towards unified regulatory standards among emerging economies.

Edited by Sebastian Sinclair