Compare and contrast India’s crypto-asset policy and OECD’s Crypto-Asset Reporting Framework. How can India’s domestic crypto policy be improved?

The Organization for Economic Co-operation and Development (OECD) has finalized the framework for cross-border reporting for cryptocurrency.

This has emphasized on the need for India to finalize its draft for regulations of Cryptocurrencies. The government needs to draft a comprehensive regulatory and taxation framework for crypto assets, taking into consideration the OECD’s framework.

OECD’s framework on Crypto assets:

• The G20 has recommended the OECD to create a framework for the automated exchange of data on crypto assets among nations for transparency and tax compliance.
• In its response, the OECD has launched a framework for reporting and information sharing about crypto-assets, called the Crypto-Asset Reporting Framework (CARF).
• The CARF will focus on cryptographically-secured distributed ledger transactions.
• Those digital assets that are covered under standard reporting are excluded from CARF.
• Also, the assets that cannot be used for investment or payment purposes are also excluded.
• CARF will reduce the anonymity and opacity of crypto transactions.

Need for framework policy policy in India:

• As India is rapidly moving towards digitisation, there is an immediate need for a regulatory framework to govern the crypto assets market.
• The absence of a regulatory framework creates uncertainties for businesses and increases the  risk of  frauds.
• An unregulated ecosystem can also facilitate money laundering, fraud and terror financing.
• India is a signatory to the multilateral competent authority agreement on automatic exchange of financial account information. Hence, India is bound to comply with the required framework.

Way forward:

With the OECD’s finalization of CARF, India has an opportunity to frame regulations now, considering the reporting guidelines of the CARF.