BENGALURU: After El Salvador’s historic move to adopt Bitcoin as legal tender (rendering it full currency status), things are looking brighter back home in India for crypto-enthusiasts.
Top sources tracking the industry told this publication that the government has moved away from its earlier hostile stance towards virtual currencies and will most likely classify Bitcoin as an asset class in India soon.
Market regulator Securities and Exchange Board of India (SEBI) will oversee regulations for the cyptocurrency sector after Bitcoin’s classification as an asset class, sources added.
India’s crypto industry is also in talks with the finance ministry regarding the formulation of a new set of regulations and industry sources point out that an expert panel at the ministry is studying the matter.
A Cryptocurrency Regulation bill is likely to be tabled in the Parliament during the Monsoon session, the added.
The development comes days after the Reserve Bank of India (RBI), in a circular, directed banks to stop avoiding transactions involving virtual tokens citing its earlier 2018 circular, since it had been quashed by the Supreme Court.
RBI Governor Shakthikanta Das, however, reiterated that there were still major concerns that have been communicated to the government on digital currencies.
“We can definitely say that the new committee which is working on cryptocurrencies is very optimistic on cryptocurrency regulation and legislation... A new draft proposal will soon be in the Cabinet, which will look into the overall scenario and take the best step forward. We are very hopeful that the government will embrace cryptocurrencies and blockchain technologies,” Ketan Surana, Director and chief financial officer, Coinsbit, and Member, Internet and Mobile Association of India said.
A white paper by Indiatech.org suggests that India’s adoption of Bitcoin as an alternative asset class is more realistic.
Due to the volatile nature of digital currencies (prices fluctuate widely on a daily basis), it pointed, they cannot be regularly used as a payment instrument.
The paper also recommended taxing investments in cryptocurrencies, making them subject to the capital gains tax under the Income Tax Act.
Hitesh Malviya, blockchain and crypto investment expert, said, “In my opinion, the Indian government will explore a way to regularise Bitcoin. I don’t think India will consider accepting Bitcoin as a legal tender in the near future because it will affect the position of the Indian rupee. Accepting bitcoin as a legal tender is a good idea for those nations who don’t have their own currency or are dependent on the US dollar”.
$2 trillion Global crypto market cap.
190% rise in global crypto users in 2018-2020.
200 mn crypto users worldwide.
5,000 digital assets exist globally.
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