Despite debating policy and regulations over the crypto industry for the past several years, the Indian government does not have — nor does it collect — basic data on the country’s crypto industry, India’s finance minister has revealed.
In statements this week to India’s Parliament, Finance Minister Nirmala Sitharaman also clarified that crypto investors would not be affected by the 2% foreign operator levy.
At the hearing, Indian lawmakers asked the finance minister for information on the number of crypto exchanges operating in India and how many Indian investors are using them. But Sitharaman replied that she had no information on that.
The Indian government does not collect such data, nor does the government have conclusive information on whether India’s crypto exchanges are involved in any illicit activities, Business Insider India reported the finance minister as saying.
The finance minister’s admissions took some by surprise, as different parts of the Indian government have been debating and grappling with — for several years now — on how to regulate the nation’s growing cryptocurrency industry.
Just one month ago, the Indian government was reportedly reviewing elements of proposed legislation that could ban cryptocurrencies. The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 was drafted in the budget session of parliament but ultimately not introduced.
Last March, the Indian Supreme Court struck down a 2018 mandate by India’s central bank — the Reserve Bank of India — that banned banks from doing business with cryptocurrency companies.
However, the minister’s comment on the 2% levy does shed some clarity. An existing levy, dubbed the “Google tax,” already applies to foreign-owned e-commerce companies for services provided in India. Addressing rumors that the existing levies could apply to crypto investors on non-India-based exchanges, the finance minister said: “Equalization levy is imposed on e-commerce operators, not on the investor.”
Sumit Gupta, CEO of CoinDCX, told Forkast.News that the finance minister’s statement still did not make clear whether the tax is applicable to cross-border transfers involving cryptocurrency.
As India is in the process of reviewing ways to regulate the nation’s crypto industry, “the government will soon or basically should start working with the exchanges and try to collect this data,” Gupta said.
CoinDCX, one of India’s largest cryptocurrency exchanges, does not have any regular contact with the government at present, Gupta said. “We are more than happy to share whatever information we have in the system so that the government can get the exact numbers.”
But the dearth of data on India’s crypto industry could also be the result of not having industry-specific regulations. “If the regulations require every exchange to have a license in India, the government will have data on the exchanges,” Gupta said, adding that there is no government agency that regulates the crypto exchanges like how the Securities and Exchange Board of India regulates the stock exchanges. Recently, WazirX, CoinDCX, CoinSwitch Kuber, and ZebPay formed a self-regulatory body with codes of conduct while waiting for government regulation that may or may not ever come.
In an interview with Forkast.News, Nischal Shetty, CEO of WazirX — which recently was investigated by Indian authorities in connection with alleged money laundering — said that the crypto industry in India has been trying to keep “clean” for regulators.
But Gupta says India’s crypto industry still needs to figure out who the crypto regulators are. “There is no single unified body that the exchanges can talk to,” Gupta said, adding that “having a regulatory framework will give guidance for the exchanges.”