India’s stance on Bitcoin and cryptocurrencies is evolving

The Reserve Bank of India has long condemned the use of cryptocurrencies, but apart from the Supreme Court’s cancellation of its 2018 bill last year, the Indian government’s position on cryptocurrencies is largely uncertain.

On the one hand, top sources tracking the government’s position said it has Totally forbidden ideaOn the other hand, more and more banks have begun to prohibit 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 an agency responsible for ensuring the country’s ability to absorb financial shocks, it has repeatedly pointed out the risks of using cryptocurrencies.Some banks still quote 2018 notice as the reason freezing Although RBI has an account that handles cryptocurrency Abolished earlier this year.

According to reports, the Securities and Exchange Commission of India, the market regulator of India, will be in the Bitcoin (Bitcoin) Is classified as an asset class. The source also said that a panel of experts is being formed to study the technology, and the monsoon meeting of the parliament will discuss the introduction of a cryptocurrency regulation bill.

Taxation issues

India has taken drastic measures to curb the amount of untaxed cash, including scrapping its 500 and 1,000 rupees banknotes in 2016. One of the biggest concerns of the Indian government is how cryptocurrency provides its users with a certain degree of anonymity and how it can be used to fund terrorism, money laundering and help other forms of criminal activities.​​​ However, this raises the question of whether cryptocurrency investors should pay for the inefficiency of digital law enforcement.

“Since the Supreme Court’s ruling in March 2020, crypto-related transactions have gained tremendous traction in India, especially among the millennial and Gen Z investor communities,” said the chief of Indian cryptocurrency exchange CoinDCX Executive Sumit Gupta told Cointelegraph, adding that “good faith regulations will help strengthen our country’s crypto ecosystem.”

In March, National Finance Minister Anurag Singh Thakur statement The government is levying income taxes on cryptocurrency revenues and even levying goods and services taxes from exchanges. However, he also pointed out that the government does not retain any data on the earnings of cryptocurrencies because it cannot obtain such information. Gupta added:

“We will continue to work with other peers in the crypto industry to submit our collective recommendations to the authorities.”

Shivam Thakral, CEO of BuyUcoin, one of India’s top exchanges, believes that RBI will eventually appear. “I firmly believe that the Reserve Bank of India is not opposed to any financial innovation that may boost the Indian economy and create jobs for young people,” he said, adding, “The main concern of the Reserve Bank of India is the abuse of power in crypto assets.”

However, Sidharth Sogani, the founder and CEO of cryptocurrency research company Crebaco Global, seems to be more optimistic about India’s readiness for blockchain technology. “Technically speaking, we are ready. The regulated environment is easy to live in, [and] It will enable the government to monitor encrypted transactions,” he said, adding further, “India needs a dedicated department to oversee the crypto space. Not regulating them will only encourage the black market. Takraal added:

“I fully believe in the Reserve Bank of India, and we can expect that the regulatory guidelines for crypto assets will soon become clear.”

The country’s method of classifying cryptocurrencies as asset classes is good news for the field because it matches the routes of various other countries to create a better framework for decentralized currencies.

“For some time, the Australian Taxation Office has considered cryptocurrency as a digital asset,” said Michael Swan, a founding member and chief commercial officer of Unido, an asset custody service company. He further stated, “We believe that the steps taken by India are natural advancements and consistent with global sentiment.”

However, people are worried about the cryptocurrency regulation bill that is about to be submitted to Parliament. After the RBI issued a notice in 2018, the government formed a group to report news related to the crypto space. In 2019, the group recommended a total ban on digital currencies.

Young and hungry

The Minister of Finance of India stated that India will Don’t turn off all options for cryptocurrency, Some people interpreted it as a possible ban on private cryptocurrencies, paving the way for the state-backed central bank digital currency (CBDC). However, as the younger generation flocks to digital assets, just like the older generation treats gold, this may be a huge lost opportunity for millennials and Generation Z who have just entered the labor market.

The Reserve Bank of India was unable to provide the Supreme Court with sufficient evidence to prove that cryptocurrencies need to be banned, which means that the Indian authorities are under pressure to allow cryptocurrencies to enter the country. However, Indian investors, especially young investors, are changing from confusion to dissatisfaction, because vague regulation makes people worry about missing the huge volatility provided by the cryptocurrency market.

“India is one of the youngest countries with a large number of early adopters of technology. Currently, we are seeing more and more people aged 24 to 40 adopting cryptocurrency,” Gupta said. However, when asked whether India’s CBDC plan had any foothold, he declined to comment. Sogani added:

“India needs a dedicated department to supervise the crypto space. Not supervising them will only encourage the black market.”

Thakral said: “After the RBI brochure outlines the possible plans for CBDC, there has not been any media statement regarding the official CBDC in India,” he further added, “We have seen reports of major banks switching to blockchain. It shows that the bank is laying the foundation for the realization of CBDC.”

Despite the recent market crash, Indian investors seem to be confident in the long-term growth of the industry, and market experts and leaders seem to be optimistic about how the authorities will legislate cryptocurrencies in the country. Despite the slow progress, things seem to be changing, but with a market of close to 1 billion users, India’s position on cryptocurrencies has attracted global attention.