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India Has A Crypto Dilemma

As India emulates China in launching digital fiat currency, will the government’s attempts at controlling the crypto sector lead to stakeholder interests being caught in policy tangles?

After many false starts, cryptocurrency has arrived in India. With two short mentions in her budget speech delivered on February 1, Union finance minister Nirmala Sitharaman announced the launch of a central bank digital currency (CBDC)—to be called digital rupee—and tax on gains made from the trading of “virtual digital assets” at the rate of 30%. These announcements have set the fast-expanding crypto sector abuzz with speculations about the impending bill and how it should respond. Sitharaman’s two short mentions are the first categorical policy statements from the government on the crypto sector, though she had told Parliament on November 30 about a bill and even listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for introduction in the Lok Sabha in the winter session of Parliament. The bill has not been tabled yet, but Sitharaman’s related announcements in Parliament have put a finality to the government’s intent to regulate and tax the sector.