Indian Finance Ministry officials said that any cryptocurrency law in the country would likely come about when the government presents the Union Budget of India on February 1, in time for it to come into effect before the next fiscal year. 

Officials from the country’s Finance Ministry said the potential legal framework would treat cryptocurrencies more like commodities than currencies, which would represent a different approach than the total ban on digital assets in India, which some Indian lawmakers have reportedly been considering.

However, the government of India knows that cryptocurrencies offer an economic opportunity if regulated properly, so the alleged bill on cryptocurrencies could include a direct tax provision. For instance, it may elucidate if cryptocurrencies would be taxed under the Capital Gains Tax regime (if considered as bringing gains), or under the Goods and Services Tax (GST) mechanism (if deemed a service being provided).

The Indian Prime Minister, Narendra Modi, chaired a meeting to discuss the issue, with government sources stating that ways must be found to prevent these unregulated markets from becoming avenues for “money laundering and terrorist financing”.

The Indian government also aims to block irresponsible crypto ads, since crypto stakeholders and the government have reached a consensus that such advertisements are misleading youths. “The government is cognizant of the fact that (blockchain) is an evolving technology hence the government will keep a close watch and take proactive steps,” said the memo. 

Cryptocurrencies are yet to be accepted as legal tender and lack legal framework and regulatory norms in the country, so the government is against ads that promise wild profits and are not transparent about the volatile nature of such trading. 

As a result, the Indian government is aiming to prohibit the cryptocurrency ads promising wild returns, which are growing across media platforms. 

However, the cryptocurrency bill expected in the winter session may clear the whole picture, so that investing in crypto assets in India is more secure and regulated.