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Kolkata: After turning its face away from the world of crypto assets for years, the Union government seems to be working towards drawing up a crypto regulatory framework and discussions are on with capital markets regulator Sebi and banking regulator RBI. Reportedly, the initial work of drawing up the regulatory structure would be done by the time the Union Budget is presented on Feb 1, 2026.
The finance ministry has begun discussions with both the regulators Sebi and RBI. The government wants to draw up a robust regulatory structure for the crypto market. As things stand now, the Union government discourages investment in crypto asses and cryptocurrency, arguing that the asset is extremely volatile and that it could be easily used for money laundering and the proceeds can even be funded for subversive activities against the country.
Though the government levies a 30% tax on gains from crypto investments, there is no single primary market regulator. Predictably, this leads to problems in monitoring and tracking of transaction and protection of investors. The new framework is being designed to achieve these eluding objectives. However, Indian youths have taken to investing in cryptocurrency and the trend is proliferating even in smaller towns.
According to news reports, Sebi would be made the primary regulator for crypto exchanges, which means all crypto exchanges will be required to register with the capital markets regulator. Sebi will look after trading platforms, disclosures, regulations and investor protection. This will go a long way in boosting investor confidence in the crypto market.
The big responsibility of monitoring cross-border transactions in the crypto market could be given to RBI. Therefore, transactions involving offshore exchanges and foreign wallets will become easier. This step will allow a close monitoring of potential fraud and irregular transactions and this is extremely important since the government is wary of misuse of the proceeds of crypto transactions and crypto currency which is a borderless asset.
Right now crypto assets are monitored by different agencies. Taxes on virtual digital assets are overseen by the Income Tax department. RBI monitors whether money laundering is taking place through this route. Illegal transactions are dealt with by the enforcement agencies.
OECD has a Crypto Asset Reporting Framework and India has supported it. But without regulation, it is a challenge to implement it. Europe has implemented Markets in Crypto Assets rules and the US is also developing legislation for the crypto market.
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, InvITs and any form of alternative investment instruments and crypto assets.)
