Lok Sabha Question No. 146 (STARRED), answered on 2023-02-13
Subject: Regulation of VDAs, Cryptos and Web3 Sectors
Ministry: FINANCE
Asked by: Dr. T. Sumathy (a) Thamizhachi Thangapandian

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA STARRED QUESTION NO.146 TO BE ANSWERED ON 13.02.2023

Regulation of VDAs, Cryptos and Web3 Sectors

## *146. DR. T. SUMATHY (a) THAMIZHACHI THANGAPANDIAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  has  prepared  any  future  roadmap  to  regulate  Virtual  Digital Assets (VDAs)/Cryptos/Web3 sectors in the country and if so, the details thereof;
- (b)  whether  the  Government  has  undertaken  any  consultation  process  with  the  relevant stakeholders, on the regulation of VDAs/Cryptos/Web3 and related policy formulations and if so, the details thereof and if not, the reasons therefor;
- (c) whether the Government is engaging with any academic or non-academic institutions to better navigate the Web3 ecosystem and if so, the details thereof; and
- (d)  whether  the  Government  is  undertaking  any  initiatives  to  ensure  the  protection  of customer interests in the VDA sector and if so, the details thereof along with the details of discussions, if any, held with the industry in this regard?

## ANSWER

## FINANCE MINISTER

## (SMT. NIRMALA SITHARAMAN)

(a) to (d): A Statement is laid on the table of the House.

STATEMENT REFFERED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. 146 RAISED BY DR.  T.  SUMATHY  (a)  THAMIZHACHI  THANGAPANDIAN, HON'BLE  MEMBERs  OF  PARLIAMENT  TO  BE  ANSWERED  ON  13.02.2023 REGARDING REGULATION OF VDAS, CRYPTOS AND WEB3 SECTORS

(a) Crypto Assets sector and Web3 sector are relatively new and still evolving. Currently there are no specific regulations for these sectors. By definition, these sectors are borderless and require significant international collaboration for any specific legislation on these sectors to be fully effective. Ministry of Electronics & Information Technology (MeitY) has released the National Strategy on Blockchain. This document provides strategies and recommendations  for  the  Indian  Blockchain  ecosystem  to  harness  the  benefits  of  this emerging technology by focusing on technological and administrative aspects. The strategy document is available at https://www.meity.gov.in/content/national-strategy-on-blockchain.

(b): Government has undertaken necessary consultations with stakeholders from time to time, including with relevant international organisations.

(c): The Government is cognizant of the emergence of the technologies related to Web3 and Blockchain and has been taking steps to create awareness and the ecosystem building around  Web3.  During  Digital  India  Week  in  July  2022,  MeitY  had  organized  a  panel discussion on 'Metaverse and Web3'. Further, Government of India is supporting industry in organizing conferences on Web3 and related technologies for understanding the ecosystem and their challenges.

(d): RBI has been cautioning users, holders and traders of Virtual Currencies (VCs) that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks.

Further,  RBI  also  advised  its  regulated  entities  to  continue  to  carry  out  customer  due diligence processes for transactions in VCs, in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism  (CFT),  obligations  under  Prevention  of  Money  Laundering  Act  (PMLA),  2002, etc.  in  addition  to  ensuring  compliance  with  relevant  provisions  under  Foreign  Exchange Management Act (FEMA) for overseas remittances.

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