India develops 5-point crypto framework based on IMF-FSB guidelines, rules out ban

India is developing a crypto regulatory framework grounded in the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB), which could lead to formal legislation within the next five to six months. Siddharth Sogani, CEO of CREBACO, which has collaborated with government agencies and ministries, told Cointelegraph that the Indian government is drafting a five-point crypto legislative approach with a global perspective.

India recently concluded its G20 summit with several significant economic announcements, but the most notable decision for the crypto community was the adoption of the IMF-FSB joint recommendations for crypto regulation, which India and other G20 nations welcomed.

The IMF-FSB recommendations advocate for regulating the crypto market rather than imposing a blanket ban. These recommendations serve as a set of regulatory guidelines that G20 countries can utilize to formulate their own independent yet collaborative crypto legislation.

Cointelegraph consulted CREBACO, a blockchain analytics firm that provided consulting services to various G20 committees and nations, to gain insight into India’s crypto strategy. Sogani, the firm’s CEO, stated that based on meetings with government officials, India is currently developing a five-point regulatory approach, emphasizing global collaboration on specific issues such as crypto taxation.

Regarding the five-point framework, Sogani highlighted that the government is focusing on:

1. Implementing advanced Know Your Customer (KYC) standards for crypto companies, encompassing the Foreign Account Tax Compliance Act (FATCA) and existing anti-money laundering standards.
2. Requiring crypto platforms to provide Proof-of-reserve audits to regulators on a real-time basis.
3. Establishing a uniform taxation policy across nations.
4. Granting crypto exchanges a status similar to authorized dealers (like banks) under the guidelines of the Reserve Bank of India (RBI).
5. Mandating key positions, such as a Money Laundering Reporting Officer (MLRO), for crypto platforms.

Sogani noted that the world has recognized that banning crypto is futile, with several nations shifting toward a regulatory approach instead of a blanket ban. Countries like the United States and Europe already have specific crypto regulations in place, while India has pursued a taxation route. He added:

“Regulations are inevitable; this ecosystem has grown substantially strong without them. Just imagine how well it would grow with proper regulations in place. Additionally, regulated markets reduce the risks of scams and illicit activities.”

India has long advocated for a global approach to crypto regulation, a point reiterated by Prime Minister Narendra Modi during the recently concluded G20 summit. An executive from the Finance Ministry confirmed that the government has adopted the IMF-FSB crypto recommendations and will focus on formulating regulations around them in the coming months.

Related: India G20 confirms ‘active discussions’ around global crypto framework

The Finance Ministry executive stated that the IMF-FSB recommendations provide a solid “framework to decide our own way forward. The foundation is ready; beyond that, how far we go is for us to decide in the coming months, after which we will take a call.”

The official also clarified that banning cryptocurrencies is no longer a viable option, noting, “If you want to ban it (cryptocurrency), go ahead and ban it. But if the rest of the countries are not banning it, it will be extremely difficult for one country to ban it.”

India currently lacks specific crypto regulations, although it imposed a 30% tax on crypto gains in 2022. However, the joint crypto recommendations and the Finance Ministry’s assurance that a crypto framework could evolve into robust legislation in the coming months offer an optimistic outlook for the crypto industry in the country.

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