International Collaboration Necessary For Effective Legislation On Regulation Or Banning Of Cryptocurrencies, NFTs: Govt

The government on Monday (25 July) said that any legislation for regulating or banning of cryptocurrencies can only be effective if there is a significant international collaboration.

In a written reply to a question in the Lok Sabha on Monday (25 July), Union Minister of State for Finance Pankaj Chaudhary said that the Cryptocurrencies are currently unregulated in the country.

"Cryptocurrencies and Non-fungible Tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards." the minister said.

Chaudhary informed that through Finance Act, 2022, a clause was inserted to section 2 of the Act to provide definition of "virtual digital assets (VDA) to mean any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically".

"Non fungible token and any other token of similar nature are included in the definition," he added.

The minister said that the government, through a notification on 30 June 2022, specified a token which qualifies to be a virtual digital asset as "non-fungible token within the meaning of sub-clause (a) of clause (47A) of section 2 of the Act but shall not include a non-fungible token whose transfer results in transfer of ownership of underlying tangible asset and the transfer of ownership of such underlying tangible asset is legally enforceable".