India’s government is opting for a limited oversight approach instead of a complete ban or full regulation. While an outright ban might address “alarming” risks from speculative crypto assets, it would be ineffective against peer-to-peer transfers and trades on decentralized exchanges. India currently allows global crypto exchanges to operate, provided they register with a local agency for anti-money laundering checks. The government also deters speculative trading by imposing a flat 30% tax on crypto income and a 1% Tax Deducted at Source (TDS) on transactions.
Global Landscape of Cryptocurrency Regulations
- United States: The U.S. has passed legislation to permit wider use of stablecoins, which are cryptocurrencies backed by fiat currencies like the U.S. dollar. This aims to provide regulatory clarity and boost innovation.
- China: China continues to maintain a ban on cryptocurrencies but is reportedly considering a policy reversal to explore a yuan-backed stablecoin. This move could be a strategy to elevate the yuan’s global role and compete with dollar-backed stablecoins.
- Pakistan: The legal status of cryptocurrency in Pakistan is complex and ambiguous. While the State Bank of Pakistan (SBP) has banned crypto transactions and declared them illegal, the government is also exploring regulation through the newly formed Pakistan Crypto Council. This has created a confusing landscape for investors, as crypto is officially considered illegal but is not fully banned in practice.
- European Union: The EU recognizes cryptocurrencies as “crypto-assets” and has implemented the Markets in Crypto-Assets Regulation (MiCA) to create a uniform regulatory framework. This regulation provides clarity on consumer protections, transparency, and market integrity for crypto services and assets.
- Azerbaijan: Cryptocurrency is not illegal in Azerbaijan but remains largely unregulated. There are no specific laws governing virtual currencies, though trading and mining are not prohibited. The Central Bank of Azerbaijan has issued warnings about crypto volatility, and income from crypto trading is subject to taxation.
