India is one of the largest and fastest-growing crypto economies in the world, but there is still no clear regulation in the country, and the position regarding cryptocurrencies is uncertain.
Regulation By Law: Is Cryptocurrency Legal In India?
In early 2018, the Reserve Bank of India (RBI) banned local banks from providing services to cryptocurrency companies, and in March 2020, the Indian Court of Appeal overturned the ban. India is open to international technological cooperation, but this is not yet possible in the cryptosphere due to the lack of regulation and the risks of a complete ban.
Regarding the regulation of cryptocurrencies in India by law, a proposal was put forward that mining, storing, selling, transferring and issuing cryptocurrencies should face a fine of 250 million rupees and a prison term of up to 10 years.
Bollywood For Crypto: How To Use Cryptocurrency In India
India’s rules on cryptocurrency have not yet been determined, and the option of a ban is still possible, one industry body has made regulatory recommendations that will benefit all parties.
They offered recommendations on the rules for using cryptocurrency in India. The recommendation includes 5 points. First of all, in the recommendations on the cryptocurrency regulation Indian policy to the government, there was a need to create a legal basis for the classification of cryptocurrencies. It is argued that virtual currencies should be classified as digital assets and regulated similarly to gold, stocks, and market securities.
Cryptocurrency will no longer be subject to currencies, which will free them from putative regulatory measures from the Reserve Bank of India.
In addition to a clear classification of cryptocurrencies, the IndiaTech policy statement also touched on the exchange rules, as well as the tax regime for cryptocurrency trading in the country. The policy recommendations call for a virtual currency exchange licensing system in India under the supervision of an appropriate supervisory agency.
Regarding taxation, IndiaTech has presented proposals for both direct and indirect taxes on cryptocurrency, including capital gains tax and general taxes on services. The policy document also calls for reliable “know your customer” (KYC) verification protocols, as well as for the creation of self-regulatory organizations to work in tandem with government agencies.
Meanwhile, the government has also ordered all companies, both private and public, to start disclosing their crypto holdings.
Problems Of The Indian Method Of Market Regulation
People use various methods to control the turnover of the cryptocurrency market in India. The Indian government has chosen the toughest scenario. Laws on this issue are not adopted, entrepreneurs are punished for their initiative.
For example, in 2018, the co-founder of the Unocoin exchange was arrested for installing a cryptomat. The trading platform can exchange digital financial assets, but it is strictly prohibited to use Indian rupees for trading operations.
In the summer of 2018, the country’s Central Bank ordered to ban any servicing of cryptocurrency exchanges, which led to the closure of some trading platforms. Others were forced to change their regional affiliation and moved to neighboring states. At the same time, the authorities planned to introduce a complete Indian ban of cryptocurrency on the storage of cryptocurrencies, even for individuals.
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