Is there a bright future for crypto in India? That’s a huge question to ask, especially now that investors in India are starting to accept Bitcoin as potential storage of wealth. Let’s take a look at some considerations surrounding the crypto issue in the country.
The future might be there if recent discussions, media reports, and views from specialists are to be accepted. Crypto discussions are not new in India. Even Nandan Nilekani, the non-Executive President of Infosys has said that bitcoin may be considered a store of wealth in India. But, he stated that cryptocurrencies are not suitable for national transactions as India currently has better options (such as UPI) to do payment transactions.
What’s been happening in India?
There were a series of events related to crypto that made India the talk of the town.
In the final week of March this year, the government required businesses to be transparent with their investments in cryptocurrency. The decision was hailed by the country's crypto industry. Experts stated that this step opened the door to Crypto on their balance sheets for all Indian businesses.
According to the CEO & Co-founder of CoinDCX Group Sumit Gupta, this announcement "will offer more clarity to Indian businesses that deal with crypto-assets and have been confused in their books before."
Will cryptos have their own laws and regulation?
There was also an opportunity to ask whether cryptos like Bitcoin affect India’s normal currency and whether there are any laws backing up the said investment. Rajya Sabha K.C. Ramamurthy was the one who opened these questions. He also inquired about the specifics of states that support or allow cryptocurrency usage, the opposing countries, and the neutral.
To answer it, the Minister of State Anurag Thakur said, “Financial Stability Board (FSB) reports on crypto-asset markets October 2018, and the 'Global Stablecoin' regulations, supervision and supervision agreements October 2020, have identified the likely risks associated with financial stability resulting from crypto-assets and stablecoins..the FSB report on crypto-asset markets states that crypto-assets lack the core characteristics of sovereign currencies and are neither a popular method of payment, a stable value store or a member of a mainstream account unit.”
With this reply, it’s clear that India is taking crypto as a risky investment, which will not be used as a payment method yet.
As to whether there will be a law to regulate cryptocurrencies in the country, the decision will depend upon IMC and if there’s any legislative proposal.
Will cryptos affect Indian currency?
According to some information provided by government officials, the government has notified users, traders, and holders of virtual currencies about the threat. Public notices might affect their decisions into buying more but it’s always associated with risks.
There has been an announcement from the 2018-19 Budget Speech wherein the government said, “The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Government will explore the use of blockchain technology proactively for ushering in the digital economy.”
While there is no direct effect on Indian currency, the government wants to monitor crypto illegal activities, especially those that are related to payments.
Would there be a Cryptocurrency Bill?
“The Government would take a decision on the recommendation of the IMC and the legislative proposal, if any, would be introduced in the Parliament following due process.” This was the government’s take on a crypto bill.
Although there is no specific cryptocurrency bill, those who earn from crypto are paying taxes based on the Income Tax Act. The total income of taxpayers should include all income coming from different resources, including cryptocurrencies. Whatever income they earn from crypto or digital assets, they should disclose it.
India is also not keeping a record or track of those earned from cryptocurrencies.
India is not completely against trading or investing in cryptocurrencies, which means there is still a chance for the country to support crypto in the near future. Like any other country, India is advising its citizens and residents to be careful in the crypto market as there are always risks. Whether you invest in crypto or not, the country will not take it against you.