India reassessing crypto stance amid global shifts, senior official says.

The review follows recent moves by the U.S., where President Donald Trump announced crypto-friendly policies and directives aimed at creating a national cryptocurrency regulatory framework. 

This shift in the global landscape could lead to further delays in the publication of India's long-awaited discussion paper on cryptocurrencies, which was originally set to be released in September 2024.

Ajay Seth, India's Economic Affairs Secretary, explained that multiple jurisdictions around the world are modifying their approach to cryptocurrencies, both in terms of their usage and acceptance. 

"More than one or two jurisdictions have altered their stance towards cryptocurrencies in terms of the usage, their acceptance, and how they view the importance of crypto assets. In that context, we are re-evaluating the discussion paper," Seth stated. 

This signals India's willingness to adapt its approach in light of broader global developments in the crypto space, reflecting the increasingly borderless nature of digital assets.

Seth emphasized that given the international scope of cryptocurrencies, India's stance cannot be taken in isolation. "Such assets don't believe in borders," he said, indicating that any regulatory framework would need to consider global trends and collaborate with other nations to ensure coherence and consistency in the rules governing digital assets.

Although Seth did not specifically mention the United States, his comments come in the wake of significant changes in U.S. cryptocurrency policy. In a major policy shift, President Trump recently ordered the formation of a working group focused on cryptocurrency. 

This group is tasked with proposing new regulations for digital assets and exploring the possibility of creating a national cryptocurrency stockpile. This marks a significant departure from previous U.S. policy, which had been more cautious toward digital currencies. 

Trump's actions are seen as a clear move to overhaul and modernize U.S. crypto regulations, aligning the nation’s approach with the growing influence of digital assets on global financial markets.

In India, the country’s regulatory stance on cryptocurrencies has been a topic of debate for several years. Despite stringent regulations and high taxes on crypto trading, there has been a significant increase in crypto investment, with millions of Indians pouring money into the sector. 

This is despite the central government's cautious approach, which has been shaped by concerns over the potential risks of private digital currencies. In December 2023, India’s Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore cryptocurrency exchanges for failing to comply with local regulatory requirements. 

These developments reflect the growing importance of the cryptocurrency market in India and the pressure on the government to strike a balance between regulation and innovation. In a notable shift last year, India’s market watchdog recommended that several regulators oversee the trade in cryptocurrencies. 

This suggests that at least some government bodies are open to considering the use of private virtual assets, signaling a potential move toward a more nuanced and flexible regulatory framework.

This stance stands in contrast to the position of India’s central bank, which has expressed concerns about the macroeconomic risks posed by private cryptocurrencies. 

The Reserve Bank of India (RBI) has repeatedly warned that cryptocurrencies could pose a threat to financial stability, citing concerns about their volatility, use in illicit activities, and potential to undermine the country’s monetary system. 

However, the RBI’s opposition has not deterred investment in digital assets, and the growing role of cryptocurrencies in India’s economy suggests that a compromise may be reached in the future.

The ongoing review of India’s crypto policy indicates that the country is taking a more cautious but open-minded approach as it navigates the evolving global landscape of digital assets. 

With major jurisdictions like the U.S. shifting toward more crypto-friendly policies, India may eventually adapt its stance to ensure that it remains competitive and responsive to the rapidly changing digital economy.