Government Regulated KYC In Cards For Trading of Bitcoins In India
The upward surge in Bitcoin prices coupled with rising use of cryptocurrency in Indian sub-continent has led to rightful government intervention. The Ministry of Finance has earlier set up an inter-disciplinary committee which has been given the responsibility of analysing the usage trends, cryptocurrency market and the embedded technology for a specific time span. At present trading/investing or using of Bitcoins in India is neither legall nor illegal.
Virtual currencies such as Bitcoins, in India, has been a topic of hot debate in government’s discussion portal MyGov. The Indian Government earlier held a negative view of the cryptocurrencies and feared breach of anti-money laundering laws. However if insider reports are to be believed then the inter-ministerial committee is presently pondering over the implementation of a compulsory Know Your Customer (KYC) norm in order to regulate its associated safety and fairness in dealing. This new improvement will be in addition to the existing regulation on foreign exchange to bring cryptocurrencies under its purview.
The committee wants to bring the cryptocurrency under the centralised regulation of Reserve Bank of India Act 1934. A probable taxation is also on the cards which shall be applicable to Bitcoin investors. Cross border payments using cryptocurrency is scheduled to be brought under the purview of FEMA Act to address issues related to foreign exchange regulation and new purchase and investment guidelines for this virtual currency is in process of being drafted.
A few days earlier, KryptoMoney.com posted an article mentioning that Bitcoins in India may attract Good and Services Tax (GST). The trading of Bitcoins in India may possible be regulated by Securities and Exchange Board of India (SEBI).
The various independent exchanges/platforms of Bitcoins in India have already implemented their own KYC norms. Thus the possible levy by Government is not expected to spread much shockwave amongst the investors.
Government also has plans for a possible entry of capital gains tax in sync with the ones applicable on commodities and stocks. The capital gains tax is expected to have a dual slab structure with lower levy on long term and higher levy on short term cryptocurrency investment gains. The Indian Bitcoin fraternity has welcomed the government regulation with open arms as they are hoping for a better working ecosystem with lesser uncertainty involved.
However there is no solid evidence regarding the success of the regulation which is soon to become a part of Indian Bitcoin industry. In the worst scenario such strict regulations might hamper the development and innovation of the huge potential of Indian cryptocurrency market.
At present the demand of Bitcoins in India is at boom. Indian Bitcoin markets now accounts for almost 10% of global bitcoin markets.
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