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No Regulation For Crypto In India
According to a Reuters report, India will not proceed with plans to introduce a regulatory framework for its local digital asset ecosystem. According to the government document, India will maintain only partial oversight in the hope of staving off systemic risks.
The policy document hinges its argument against crypto regulation on the Reserve Bank of India’s (RBI) view that a regulatory framework is not the ideal way to stifle the risks from cryptocurrencies. According to the document, the current regulatory clarity has played a significant role in mitigating the risks associated with digital assets.
Currently, Indians hold less than $4.5 billion worth of cryptocurrencies, an amount that the government document deems insignificant in posing systemic risks to the financial system.
The report points to the grim possibility of a bank run and the liquidity crisis if a significant percentage of the population converts their holdings to cryptocurrencies. Furthermore, the document notes that widespread use of stablecoins can adversely affect the Indian payments system in the event of a depegging.
 
There are fears that stablecoins will fragment national payment systems, putting the Unified Payment Interface (UPI) at risk.
While India has dimmed hopes for regulatory framework, authorities are still policing the industry with makeshift rules. For starters, a government agency is in charge of licensing global crypto exchanges to operate in the country after checks on KYC and AML procedures.
To tighten the screws on the industry, India has imposed stiff tax liabilities on service providers and their users. For starters, India will have to pay a 30% capital gains tax and a 1% TDS (tax deductible at source) for each crypto transaction.
A mad dash for cryptocurrency regulations
Around the globe, countries are adopting a frenetic approach toward cryptocurrency regulation. Keen on transforming America into the world’s crypto capital, US President Donald Trump signed the GENIUS Act into law, aimed at providing a regulatory framework for stablecoins.
The US is advancing a broader market structure bill, while Japan and Australia are making concerted efforts to regulate their local cryptocurrency ecosystems. Meanwhile, China has maintained its stance on a blanket ban for digital assets, but there are whispers that authorities are mulling the possibilities of a yuan-backed stablecoin.
Source: https://zycrypto.com/india-holds-back-on-full-crypto-regulation-over-fears-of-systemic-risks/