Speaking at Inc42’s Fintech Summit 2022, Dr Patnaik talked about what the approach can be for tackling the crypto regulation in the country
He noted that by starting to regulate crypto as an asset class, the current regulatory issues can be resolved, with SEBI acting as the sole regulator
Talking about banning cryptocurrencies, Dr Patnaik said that banning crypto was neither the solution nor would it work out
Speaking on the second day at Inc42’s Fintech Summit 2022, Dr Amar Patnaik, Rajya Sabha MP (BJD) and Member, Parliamentary Standing Committee on Finance, Government of India, talked about how crypto can be managed as an asset class, and how the Securities and Exchange Board of India (SEBI) can act as the regulator.
He talked about what the approach can be for tackling the regulation of crypto in the country. Dr Amar Patnaik said that a graded approach can solve multiple challenges and resolve confusion between the regulators.
“You can follow a graded approach, either through a separate sandbox in the central bank or a securities regulator like the SEBI,” Dr Patnaik said.
He also noted that by starting to regulate crypto as an asset class, the current regulatory issues can be resolved, with SEBI acting as the sole regulator of all crypto assets.
“Otherwise, they could also think in terms of allowing a particular class of assets. So, if you treat crypto not as currency but as an asset class and start doing it through a regulator which in India would be SEBI. I think we start with the asset class and then start regulating them [cryptocurrencies], they start regulating the exchanges itself,” Dr Patnaik commented.
Dr Patnaik also brought up GST evasion from the crypto exchanges, saying that the crypto exchanges are providing a service but were found to not be paying GST.
“I must inform you that the exchanges have been asked to pay GST. They are providing a service, they were found not to be doing it. All of this will help make the system more robust in the larger interest of consumers,” the Rajya Sabha MP noted.
Talking along the lines of legislation and banning of cryptocurrencies as a whole, Dr Amar Patnaik said that banning crypto was neither the solution nor would it work out. He noted that the technology used in cryptocurrency is too different for the government to be able to ban crypto outright.
“I don’t know why you’d pass such legislation. Completely banning [crypto] is not implementable, because the technology is different,” Dr Patnaik commented.
Dr Patnaik’s comments come as India has adopted a strict crypto taxation regime, which includes a 30% tax on all crypto gains with no option to offset the losses on one crypto asset with the gains on the other. What’s more, the government also introduced a 1% TDS on all crypto transactions above INR 10,000.
The government has also been working to see if crypto can be brought under the GST ambit, charging as much as 28% more on the asset. In all, if everything goes as the government is planning, asset holders might have to pay as much as 59% tax on their holdings.
This is contrasted with the fact that India is the largest crypto investing nation in the world in terms of the number of investors, with around 100 Mn crypto investors in the country, according to an Inc42 report.