Crypto may be allowed as asset in India not currency: Report

The Indian government is reconsidering its attitude on cryptocurrencies and may soon enable them to be used as an asset class in the country. This implies that people in India may be able to purchase and sell cryptocurrencies in the form of stocks, gold, or bonds. To provide a secure trading environment for crypto investors, the government is also expected to issue guidelines for crypto exchanges in the nation, as well as a new taxation structure.

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When it is made, the decision would be India’s first formal regulation of cryptocurrencies. The move was hinted at in a recent Economic Times report. It states that while the government may approve the use of cryptocurrencies as assets, their use as a currency may be prohibited. This implies that users in India would be unable to utilize cryptocurrencies such as Bitcoin or Ethereum for transactions.

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According to the sources quoted in the report, discussions on such regulation are still ongoing, and there is a possibility that the government may levy a tax on such cryptocurrency trading in India. According to another Business Standard report, the government intends to levy a 1% GST on cryptocurrency exchanges, which will be collected at the source. This will most likely be collected by the exchanges from the investors that use the platform.

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According to the report, cryptocurrency exchanges would be categorized into three types: facilitators, brokerages, and trading platforms. While brokerages assist buyers and sellers connect, trading platforms, which are largely electronic, provide software for placing trades and monitoring markets.

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Aside from categorization and taxation, the government is also aiming to implement restrictions around ads by such crypto exchanges. According to the ET report, the government may prevent cryptocurrency exchanges and platforms from engaging in “active solicitation.” In practice, this would likely entail a restriction on the number of advertisements advising people to put their money in cryptocurrencies without alerting them of the potential risks.

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According to the sources of ET, the administration is finalizing the specifics of the law and that it might be given to the cabinet for consideration in the next two to three weeks.

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Surprisingly, the sources also mentioned that the Securities and Exchange Board of India (SEBI) may be tasked with regulating the crypto sector in India. For those who are unfamiliar, SEBI is India’s regulating organization for the securities and commodity markets. It is under the authority of the Ministry of Finance and regulates the country’s stock market.

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The draft bill on cryptocurrency regulations is expected to be introduced during Parliament’s upcoming winter session.