OECD global framework in place, India to focus on crypto asset regulations

• The government plans to move ahead with its discussions for framing an overarching regulatory and taxation framework for crypto assets.

A cross-border reporting framework

• The OECD recently released a new global tax transparency framework, Crypto-Asset Reporting Framework (CARF), for reporting and exchange of information with respect to crypto-assets.
• In response to an earlier proposal of G20 that the OECD develop a framework for the automatic exchange of information between countries on crypto-assets.
• CARF will be presented to G20 Finance Ministers and Central Bank Governors for discussion.

Need for regulation of cryptocurrencies

• Cryptocurrencies 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.

Steps taken in India

• April 2022 - India introduced a 30% income tax on gains made from cryptocurrencies.
• July 2022 - rules regarding 1% tax deducted at source on cryptocurrency came into effect.
• Concerned about the potential misuse of crypto assets to fuel money laundering and prohibited end uses.

Prelims Takeaway

• CARF
• G20
• OECD