India’s stance on bitcoin and cryptocurrencies is evolving

The Reserve Bank of India has long condemned the use of cryptocurrencies, but aside from the Supreme Court repealing the 2018 bill last year, the Indian government’s stance on cryptocurrencies is largely uncertain.

On the one hand, top sources following the government’s stance say they have moved away from the idea of ​​a total ban. On the flip side, many banks have started banning crypto-related companies from accessing their services, including ICICI Bank, Paytm Payments, Yes Bank, and most recently IDFC Bank.

The position of the Reserve Bank of India (RBI) is understandable. As the body responsible for the country’s resilience to financial shocks, they have repeatedly pointed out the risks of using cryptocurrencies. Some banks still cite the 2018 circular as the reason for freezing crypto trading accounts, despite the RBI abolishing it earlier this year.

According to reports, the Indian market regulator, the Securities and Exchange Commission of India, will oversee legislation for the crypto sector as Bitcoin (BTC) is classified as an investment product. Sources also suggest that a panel of experts will be formed to study the technology and that the monsoons session of parliament will discuss the introduction of a law to regulate cryptocurrencies.

A tax problem

India has taken drastic measures to limit the amount of cash that is not taxed, including the demonetization of 500 and 1,000 rupee bills in 2016. One of the main concerns of the Indian government is how cryptocurrencies have a certain level of currency Creating anonymity to users and how they can be used to finance terrorism, money laundering and other forms of criminal activity. However, this begs the question of whether crypto investors should pay the price for the inefficiencies of digital law enforcement.

“Since the Supreme Court ruling in March 2020, crypto-related trading has grown in prominence in India, particularly among Millennial and Generation Z investing communities,” Sumit Gupta, CEO of India-based crypto exchange CoinDCX, told Cointelegraph, adding: , “Sensible regulations will help strengthen the crypto ecosystem in the country. Our water.”

In March, State Treasury Secretary Anurag Singh Thakur announced that the government would impose income taxes on cryptocurrency revenues and even taxes on goods and services from exchanges. However, he also noted that the government does not maintain data on crypto earnings as it has no way of collecting such information. Gupta added:

“We will continue to work with other colleagues in the crypto industry to present our joint proposals to the authorities.”

Shivam Thakral, CEO of BuyUcoin – one of India’s leading exchanges – believes the RBI will come at some point. “I firmly believe that RBI is not against financial innovations that have the potential to boost the Indian economy and create jobs for young people,” he said, adding, “The main focus of RBI is on the abuse of crypto Assets. “

However, Sidharth Sogani, founder and CEO of crypto research firm Crebaco Global, seems much more optimistic about India’s readiness for blockchain technology. “We are technically ready. The regulated environment is very livable, [and] will allow the government to monitor cryptocurrency transactions, “he said, adding,” India needs its own department to regulate the crypto space. Not regulating them will only promote the black market. ”Thakral added:

“I have full confidence in RBI and we can expect clarity about the regulatory guidelines for crypto assets.”

The country’s approach to classifying cryptocurrencies as an asset class is positive news for the space as it aligns with other countries’ roadmaps to create better frameworks for currencies.

“Cryptocurrency has been classified as a digital asset by the Australian Tax Office,” said Michael Swan, founding member and commercial director of custodian service provider Unido. “We see the steps India has taken as natural progress and in line with the global sentiment,” he added.

However, there are concerns about the bill on crypto regulation that will be presented to parliament. Following the RBI circular in 2018, the government set up a panel to report on news related to the crypto space. In 2019, this council proposed a total ban on digital currencies.

Young and hungry

India’s finance minister has stated that India will not close all options on cryptocurrencies, which some see as a possible ban on private cryptocurrencies and paving the way for cryptocurrencies. However, as the younger generation flocks to digital assets like the older generations did with gold, this could be a big missed opportunity for new Millennials and Gen Zers to get into the workforce.

The RBI’s inability to present enough evidence to the Supreme Court that cryptocurrencies need to be banned means that Indian authorities are under pressure to allow cryptocurrencies in the country. However, confusion drove Indian investors, especially young ones, into dissatisfaction as unclear regulations fuel fear of missing out on the huge swings the market has to offer.

“India is one of the youngest countries with a large number of people who are early adopters of technology. Right now we’re seeing more and more people between the ages of 24 and 40 using crypto, ”Gupta said. However, when asked if India’s plans to build a CBDC would rise, he declined to comment. Sogani added:

“India needs its own department to regulate the crypto space. Not regulating them will only promote the black market. “

“After the RBI brochure outlined possible plans for a CBDC, the media did not comment on the official Indian CBDC,” Thakral said, adding, “Thakral adds: We have seen reports of major banks moving towards blockchain move, and that could be a sign that banks are laying the foundation for making CBDC a reality. “

Indian investors seem confident about the industry’s long-term growth despite the recent market crash, and experts and market leaders seem optimistic about how authorities will manage the domestic cryptocurrency. Although progress is slow, things seem to be moving, but with a market of nearly 1 billion users, India’s stance on cryptocurrencies is a global concern.