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Indian government to soon come up with Virtual currency regulations

Feb 08, 2018 Posted /  2971 Views

Indian government to soon come up with Virtual currency regulations

There was chaos in the cryptocurrency market when the Indian media wrongfully reported that the Indian Finance Minister, Arun Jaitley in his budget speech had expressed that India might ban cryptocurrencies. However, it was later clarified by the FM himself that the government is not planning anything like this at any near time. Nevertheless, as FM stresses that though it will not ban, still these currencies are not a legal tender. At the same time industry experts asserted that the Union government will soon come up with a legal framework and ecosystem to regulate the virtual currency space.

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It is being reported by the local media that the government is looking to issue some regulatory measures by the end of March or early April as it is awaiting a report from an expert committee appointed by Economic Affairs Secretary Subhash Chandra Garg. Ajeet Khurana, Head, Blockchain and Cryptocurrency Committee of India (BACC) of the Internet and Mobile Association of India (IAMAI) told Indian Express

“By end of March, we should see something akin to a policy framework for India.”   

With this being said it is most likely that many Bitcoin holders who sold their crypto assets during the cryptocurrency boom phase might pay up for their transactions. Khurana added,

“There is no doubt that you need to pay tax for the Bitcoin trading that has been sold in a profit. The only concern is if it will be considered as a short-term capital gain or business income because when you are filing return it will make a difference.”

He comments that it is fair for the government to ask for everyone to pay their taxes if they have gained some sort of income. Lately, there were also reports in the media that Income tax department of India issued notices to some cryptocurrency investors, who had not disclosed their profits through virtual currencies.

Doubts, fears and official comments

If misreporting of Budget speech was not enough, secretary of economic affairs SC Garg shortly afterwards announced that the government will set up a panel to examine trading of crypto assets in unregulated exchanges. It created further panic among the cryptocurrency investors. It is likely that the panel might submit its conclusions in a report by the end of March 2018.

Khurana is one of those rare people in the country that seem to be working towards spreading enlightenment on cryptocurrency in India. Subsequent to the finance minister’s remarks, Khurana was quoted by Forbes saying that he was happy that cryptocurrency found a space in the country’s national budget.

“I recognized that it was a step in the right direction. Having the finance minister say that cryptocurrency isn’t legal tender is perfectly logical –-- every nation barring Japan has taken this stance. It doesn’t mean crypto trading is illegal but comes with its own risks like any other investment asset in the market.”

Regardless of all the negative developments, India’s cryptocurrency trading volumes have seen unprecedented growth. While there are no official figures for the same Khurana mentions that there are at least five million active traders in India, transacting via regulated banking channels.

Additionally, IAMAI might soon launch an online course to aware the investors in the cryptocurrency space, using insights from the industry experts and Bitcoin exchanges including a self-assessment test. “There are multiple dimensions to Bitcoin such as the technology, security and privacy. It is important to be aware of every aspect, to understand Bitcoin better and make informed decisions while trading,” appended Khurana.

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