India’s reserve bank has long condemned the use of cryptocurrencies, but aside from the Supreme Court rejecting its 2018 bill last year, the Indian government’s stance on cryptocurrencies has been 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 other hand, more and more banks have started banning cryptocurrency-related companies from accessing their services, including ICICI Bank, Paytm Payments, Yes Bank and most recently IDFC First Bank.
The position of the Reserve Bank of India (RBI) is understandable. As the body responsible for the country’s ability to cushion financial shocks, it has repeatedly pointed out the risks of using cryptocurrencies. Some banks still cite the 2018 circular as the reason for freezing accounts trading cryptocurrencies, even though RBI lifted it earlier this year.
According to reports, India’s market regulator, the Securities and Exchange Board of India, will oversee legislation for the cryptocurrency sector once Bitcoin (BTC) is classified as an asset class. 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 cryptocurrency.
A tax problem
India has taken drastic measures to curb the amount of untaxed cash, including the demonetization of its 500 and 1,000 rupee banknotes in 2016. One of the Indian government’s biggest concerns is how cryptocurrency provides a level of anonymity to its users and how it could be used to finance terrorism, laundering money, and aid in other forms of criminal activity. However, this begs the question of whether cryptocurrency 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 tremendously in India, particularly among the Millennial and Generation Z investing community,” Sumit Gupta, CEO of India-based cryptocurrency exchange CoinDCX, told Cointelegraph, adding : “Well-intentioned regulations will help strengthen the crypto ecosystem in our country.”
In March, State Treasury Secretary Anurag Singh Thakur stated that the government is levying income taxes on cryptocurrency revenues and even collecting goods and services taxes from exchanges. However, he also noted that the government does not maintain data on cryptocurrency revenue as it has no way of collecting such information. Gupta added:
“We will continue to work with other colleagues in the crypto industry to bring our collective 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 the RBI is not against financial innovations that have the potential to boost the Indian economy and create jobs for the youth,” he said, adding: “The main concerns of the RBI are the abuse of power- Crypto assets. “Have.”
However, Sidharth Sogani, founder and CEO of cryptocurrency research firm Crebaco Global, seems much more optimistic about India’s readiness for blockchain technology. “We are technically ready. Regulated environments are easy to live with, [and] will allow the government to monitor crypto 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 soon.”
The country’s approach to classifying cryptocurrencies as an asset class is positive news for the space as it aligns with the routes of various other countries to create better frameworks for decentralized currencies.
“Cryptocurrencies have been viewed as a digital asset by the Australian tax authorities for some time,” said Michael Swan, founding member and chief commercial officer of asset management company Unido. He went on to say, “We see India’s steps as natural progress and in line with the global mood.”
However, there are concerns about the bill on cryptocurrency regulation that is due to be introduced in parliament. Following the RBI circular in 2018, the government set up a body to report on news in the crypto space. In 2019, this committee recommended a blanket ban on digital currencies.
Young and hungry
India’s finance minister has stated that India will not close all options on cryptocurrencies, which has been interpreted by some as a possible ban on private cryptocurrencies, paving the way for a state-backed central bank digital currency (CBDC). However, with the younger generation flocking to digital assets like the older generation did with gold, this could be a big missed opportunity for millennials and Gen Z people just starting out in their careers.
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, Indian investors, especially the younger ones, are getting confused to angry as obscure regulation raises the fear of missing out on the huge swings in cryptocurrency markets.
“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 for a CBDC had a hold, he refused 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, there was no media release on India’s official CBDC,” Thakral said, adding, “We have seen reports of large banks migrating to blockchain, and this could be.” Be a sign that “Banks are laying the foundations for the realization of a CBDC.”
Indian investors seem confident about the industry’s long-term growth despite the recent market crash, and market experts and leaders seem optimistic about how authorities will legislate crypto in the country. Although progress is slow, things seem to be moving, but with a market of nearly 1 billion users, India’s stance on crypto is of global importance.