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Virtual Digital Asset Regulation: Global Perspectives and Challenges -…
Virtual Digital Asset Regulation: Global Perspectives and Challenges
About VDAs
Exist only in digital form, used for transactions, investments, or as a store of value.
Decentralized, operating independently of central authorities, leading to calls for regulation.
Digital forms like cryptocurrencies and tokens secured with cryptography and blockchain technology.
Regulatory Measures in
India (PMLA Compliance)
VDA SPs brought under AML-CFT regulations of the PMLA in March 2023.
Implemented 1% tax deducted at source on cryptocurrency in July 2022.
Must register with FIU IND, but enforcement challenges persist.
Introduced a 30% income tax on gains from cryptocurrencies in April 2022.
Need for
Regulating VDAs
Lack of consumer awareness mandates transparency and accurate information dissemination.
Fragmented regulatory landscape requires a unified framework for consistency.
Market volatility requires regulation to protect investors from financial losses.
Cross-border transactions need regulation for foreign exchange, taxation, and jurisdictional disputes.
Growing VDA adoption in India necessitates a regulatory framework.
Way Forward
Prioritize cybersecurity measures for VDA stakeholders.
Conduct public education campaigns for informed decision-making.
Harmonize international standards, collaborating on anti-money laundering and taxation rules.
Regularly review and update regulations to adapt to emerging trends.
Establish clear and comprehensive regulations for the VDA market.
Advantages
of VDAs
Enhanced privacy and security.
Decentralization reduces the risk of manipulation.
Lower transaction costs compared to traditional banking.
Fosters financial innovation and allows for asset diversification.
Accessibility to anyone with an internet connection.
Various
Challenges
Regulatory complexity due to evolving technology and legal frameworks.
Volatility complicates use as a stable means of payment.
Decentralization makes control challenging for governments.
Susceptibility to cybersecurity risks, theft, and fraud.
High level of anonymity poses challenges for authorities.