The inter-ministerial committee on legalizing Bitcoin in India is expected to submit a report in favor of regulations.
Indian media outlets have reported about the recently held session of the country’s parliamentary inter-ministerial committee on cryptocurrency. The committee’s first session is said to have concluded on a promising note, where a majority of the members were in favor of introducing regulations on cryptocurrency usage, thereby offering a legal status to Bitcoin and other virtual currencies. On the other hand, few committee members called for a complete ban on cryptocurrency usage in the country.
According to news reports, the positive outlook towards virtual currencies expressed by the committee members increases the likelihood of Bitcoin and other cryptocurrencies receiving a legal status soon. The committee has decided to focus on exploring the possible amendments to the Reserve Bank of India Act required to assign a legal position to cryptocurrencies.
Provided the committee successfully decides upon conferring a legal status to Bitcoin, with suitable amendments to existing regulations, then all cryptocurrency transactions and investments will become taxable assets. In addition to taxation, there is also a possibility of the government imposing strict Foreign Exchange Management Act (FEMA) regulations against overseas cryptocurrency investments. Bitcoin users will also be required to meet stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
The committee is expected to present its findings to the parliament by mid-May, based on which the concerned ministry (Finance Ministry) will take further action.
While assigning a legal status to Bitcoin is welcomed by India’s cryptocurrency businesses, there are few concerns about its eventual impact on the sector. Indian regulators have in the past gone overboard with investment and tax regulations. If the government decides to overreach in this matter, it could end up hampering the growth of cryptocurrency ecosystem in India. The government should weigh the pros and cons, make necessary allowances for the industry’s progress while framing new cryptocurrency laws.