India is on the horns of a cryptocurrency dilemma. Photo: Agencies

Indian Finance Minister Nirmala Sitharaman has flagged his concern over the possible misuse of cryptocurrencies and said an official decision will not be rushed through.

In an interaction at Stanford University in the US, she said: “It will have to take its time … all of us to be sure that at least with given the available information, we’re making the right decision. It can’t be rushed through.”

The minister said the government is keen to tap and promote innovation that is happening in blockchain technology. She said: “Our intention is in no way to hurt this (innovation around crypto) … but (we need to) define for ourselves …”

Cryptocurrencies can also be manipulated for money laundering or terror financing, the minister noted. So these are some of the concerns, not only in India, but in many countries which have discussed the global, multilateral platforms, she added.

A week ago while participating in a panel discussion organized by the IMF, the finance minister made a strong case for regulating cryptocurrencies at a global level to mitigate the risk of money laundering and terror funding.

She said that as long as the non-governmental activity of the crypto assets was through unhosted wallets, regulation was going to be very difficult.

Meanwhile, India is planning to introduce a central bank-backed digital currency or Central Bank Digital Currency, which would be issued by the Reserve Bank of India.

While delivering the annual budget speech in the Parliament on February 1, she also announced that the government would levy a 30% tax on gains made from any other private digital assets from April 1.

Volumes decline

Following the adoption of the new cryptocurrency tax law, the volume of trading on major Indian cryptocurrency exchanges has decreased.

According to a report in CoinDesk, the volumes of four Indian exchanges – WazirX, ZebPay, CoinDCX and BitBns – declined in April. WazirX was down 72%, ZebPay was down 59%, CoinDCX was down 52% and BitBns was down 41%.