The government of India is planning to launch a new bill for cryptocurrency regulation. They want to first “define” what is cryptocurrency perceived as and then proceed to regulate it accordingly.
The Government of India will “Define” Cryptocurrency to Formulate Regulations
It looks likely that Cryptocurrency is going to witness a ‘mammoth change’ in India, with a recent report on The Economic Times claiming that the Government is ready to ‘define’ it, apparently through the introduction of a new bill that aims to segment cryptocurrencies.
This proposed draft bill also tables the idea of ‘compartmentalizing’ virtual currencies based on their use cases. Thus, if cleared, cryptocurrencies would henceforth be treated as a commodity/asset for all purposes, including taxation as per user case payments, investment, or utility.
For the very first time, cryptocurrencies will be categorized. But the focus remains on the end-use of the assets for regulatory purposes. It is believed that the new bill would chalk out the tax treatment of these digital assets while further defining their classification in the books. However, whether the cryptocurrencies would be considered as currencies, commodities, services, or more equitable, still requires clarity. It eventually depends on the laws of the land, as the main concern of the ambiguity is regarding how the asset is taxed and regulated.
After defining the cryptocurrencies, the focus must also go towards recognizing crypto tokens as digital assets as opposed to a currency, besides also clarifying the policies on exchange ownership parameters, KYC, accounting and reporting standards, and so on.
Further on, it was also mentioned that the cryptocurrency assets defined and classified by the government would be allowed to trade in India, and the crypto coins would be taxed accordingly. A tax on the similar lines of Security Transaction Tax (STT) is being considered in this regard. These digital assets might just well be subject to Income Tax as well if they are classified as commodities. The income could be taxed as business income in the hands of the investors adhering to the normal IT rates.
This move comes as a bid to boost the morale of crypto-investors in the country, as previously, the Reserve Bank of India (RBI) had flagged the issue of cryptocurrency, primarily because of its unregulated nature, coupled with the lack of any prior framework in place. The introduction of this bill is set to bring a formidable rise of knowledge regarding the arena of digital currency, which has, for a long, especially in India, been a subject of mystery for the most. And the spread of this knowledge is bound to bring about a sharp increase in cryptocurrency investors in the country.
However, while this Bill brings forward a lot of hope and captures the attention of a wide range of industry experts, investors, and crypto exchanges alike, only time can tell how this set of budding rules will go on to shape the future of crypto in India.
Indeed, it is time for people to think beyond the realms of ‘gold’ in terms of investment. They should now aim for the ‘digital gold’. Cryptocurrencies like Bitcoin, which is the most valuable of the lot, are gradually developing as an asset with incredible potentials of being both a short and long-term investment. Besides, India is also witnessing a massive boost to its BitCoin Industry, thanks to Cryptocurrency exchanges like CoinSwitch Kuber, which give people the opportunity of digital crypto investments right from the comfort of their homes. There are a lot of added advantages as well. Unlike stock exchanges, Bitcoin exchanges are open 24 hours every day, non-stop, allowing traders to exchange Bitcoin or other digital assets round the clock. Besides, Bitcoins also have a finite supply.
It is a decentralized cryptocurrency that is not issued by any federal government or a central banking system, making it much similar to Gold. It is produced by a collective computational power of “miners,” who happen to be individuals or a group of people who work to verify transactions that take place on the Bitcoin network and are compensated with bitcoins in exchange for their time, computing power, and effort.
It is needless to say that if gold has lost its shine, then it is BitCoin which is ready to take its place. India is already witnessing a positive climb in this respect; people are slowly getting more and more aware of the perks of investing in cryptocurrencies. Indeed, crypto is for the future, and the planned legislation can be seen as a step in the right direction.