- 08 Jul, 2018
Regulating digital currencies especially bitcoin is on the government agenda for few years now. Indian Government considers taxing Bitcoins now. The government was studying blockchain and its applications in banking and finance industry for several years. The research quest started when Reserve Bank of India (RBI) cautioned people regarding the use of digital currency such as bitcoins in December 2013. We have come a long way since then. Mr Raghuram Rajan, Governer of RBI, 0n December 2015 remarked that digital currencies such as bitcoin would help transition towards a cashless society. Recently, a inter-disciplinary committee of finance ministry officials, IT ministry experts, RBI officials and NITI Aayog experts is set up to draft guidelines for regulating bitcoins in the country. The report is expected to release by the end of July. The industry experts anticipate following outcomes if bitcoins are legalized in India.
- Regulation of bitcoins would fall under the purview of RBI ACT, 1934.
- Reserve Bank of India would have the authority to draft guidelines regarding investments and purchase of digital assets such as bitcoins.
- The investors would have to pay the taxes on bitcoin purchase as well as on the returns on their bitcoin investments as specified by the guidelines
The current status of bitcoin in Indian is neither legal not illegal. Experts plan to regulate bitcoins similar to the physical gold. Bitcoins will be traded on the national exchanges where government can keep a control on its use for illicit activities such as drug trafficking, terror funding, money laundering, etc.
India is one of the most lucrative cryptocurrency market in the world. Current cryptocurrency market capitalization exceeds $100 bn, without active participation from over 1.3 billion indians. The acceptance of digital currencies is growing in India for past 24 months. India accounts for over 10% of global cryptocurrency trade, ranking fourth largest cryptocurrency markets in the world. Several bitcoin exchanges such as Zebpay, Unocoin, Coinsecure has been operating under self-regulating platforms by following strict KYC norms in the absence of clear guidelines. These exchanges have gained investors trust by providing trustworthy services in the midst of chaotic and volatile market dynamics.
Recently the government had invited public opinion on its MyGov.in website to provide suggestions on whether to regulate bitcoins or not. Over 4,000 comments were posted in the initial few weeks, with most of them encouraging government to have a regulatory framework for bitcoins. The process of regulating bitcoins is turning truly democratic in nature for the largest democracy in the world.