According to the Financial Times, the Indian government has warmed up to crypto, following the example of the U.S.
The government is now reportedly holding frequent meetings with local crypto industry leaders in a major reversal.
The Indian crypto industry is trying to take advantage of this dramatic change by lobbying for tax cuts.
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India has a strict crypto tax regime that includes a 30% capital gain tax on all profits from digital currency transactions. The framework, which was adopted back in February, is hampering innovation in the country, according to industry lobbyists.
The report says that the Indian government’s openness to crypto has been partially influenced by ongoing trade negotiations with the U.S.
However, the increase in engagement on the part of the government does not mean that the industry will be able to see regulatory clarity in the near future.
The Reserve Bank of India (RBI), the central bank of one of the world’s largest economies, banned banks and financial institutions from dealing with crypto, delivering a massive blow to the fledgling industry. The ban was later overturned back in March 2020, temporarily reviving the industry.
In 2021, the Indian government introduced a draft bill that proposed imposing a blanket ban on all private cryptocurrencies. However, the ban was never enacted, and the local crypto industry started seeing rapid development before the introduction of the draconian taxation regime of 2022 that led to a significant decline in trading volumes.