From exercising caution over Bitcoin cryptocurrency, the Government of India could finally be moving towards compliance.
As per a recent CNBC India report, a committee of finance ministry officials, IT ministry officials, NITI Aayog, and Reserve Bank officials, may be inching closer to legalizing virtual currencies in India.
The Inter-Disciplinary Committee’s report is expected to be announced by the end of July, after which the Securities and Exchange Board of India (SEBI) may be asked to step in to regulate transactions.
So, if Bitcoins are legalised in India, the following would happen:
- Bitcoins would fall under the purview of RBI’s 1934 Act.
- Bitcoin investors would be taxed.
- RBI would issue guidelines regarding investment and purchase of Bitcoins.
- If any foreign payment is made through Bitcoins, it would fall under the purview of FEMA Act.
- Returns from investment in Bitcoins would be taxed.
Interestingly, the news comes around the same time when the Bitcoin trade analyst, Chris Burniske, highlighted that trades from India accounted for 10% of global cryptocurrency trade, in May.
He tweeted a chart tracking cryptocurrency trades that show India accounted for 16,754.76 coins by trade volume. It has also been ranked fourth on the Bitcoin cryptocurrency trading market.
— Chris Burniske (@ARKblockchain) June 15, 2017
But sample this. While India still mulls over legalising cryptocurrency, China’s central bank — the People’s Bank of China — has already developed a prototype of a cryptocurrency that it could end up circulating it in the near future. It would be introduced alongside the China’s primary currency, the renminbi or the yuan. China will be simulating possible scenarios and running mock transactions using the cryptocurrency with some commercial Chinese banks.
Bitcoin And The Indian Government
Over the past few years, despite the lack of regulations in the Indian digital currency industry, a few Bitcoin exchanges have sprung up and started operating with self-regulated trading platforms with strict Know Your Customer (KYC) and anti-money laundering systems in place. These include startups like Zebpay, Coinsecure and Unocoin.
These startups have also raised funding from investors and have slowly been building faith in the Bitcoin and digital currency sector despite skepticism from the government.
For instance, Bengaluru-based Bitcoin startup, Unocoin, raised $1.5 Mn in a Pre Series-A round from Blume Ventures, Mumbai Angels and ah! Ventures last September. Similarly, Ahmedabad-based mobile Bitcoin wallet startup, Zebpay, raised Series A funding of $1 Mn from angel investors in January 2016. And Bitcoin trading platform Coinsecureraised $1.2 Mn as part of its Series A investment round from an undisclosed investor in April 2016.