Regulation of Cryptocurrency in India: Cryptocurrencies Likely to be Treated as Asset s

Cryptocurrency can be used for payments towards economic activities once it has been entitled as an asset: Former RBI deputy Governor.

Cryptocurrency

Cryptocurrency

Bitcoin is the oldest cryptocurrency in the market. It is said that Bitcoin is the safest belt for investors who are looking to invest in the crypto market. The crypto market is highly volatile but still, Bitcoin has been able to accumulate trust from inside and outside the crypto community. 

Globally, bitcoin is known as the largest cryptocurrency in terms of market capitalization.    It’s also the first virtual currency that leveraged peer-to-peer technology to enable real-time payments. What makes Bitcoin special is that it’s a form of digital or virtual currency that is free from any third-party intervention or control. Its value was nothing a decade ago, but today each coin is worth almost $50,000. It is expected that one day Bitcoin can operate alongside fiat currencies like the dollar, euros, or, in India’s case, the rupee.

 

Cryptocurrency Investment in India

The list of names supporting cryptocurrency includes a new member R Gandhi, former deputy governor of the Reserve Bank of India. He said that cryptocurrency can be used for payments towards economic activities, for buying goods and services, once it has been entitled as an asset or commodity.

At the inaugural session of India’s first-ever crypto-asset conference, HODL-2021, organized by the Blockchain and Crypto Assets Council (BACC) of the Internet and Mobile Association of India, Gandhi said in support of cryptocurrency that it is a valid legal activity. 

In the past few months, some commending developments and worldwide acceptance of cryptocurrency has uplifted people’s opinion and resulted in a sharp reassemble for the support of cryptocurrency. Gandhi said that cryptocurrency needs to be treated as an asset and should be taxed based on its payment channels. “On entry in a citizen’s hand, crypto should be considered as a foreign asset. Then, it should be paid through normal channels when it is bought, if not, it will be considered as extracted. It should be fully tracked through a depository or repository of information. Then exchanges can facilitate trade (buy and sell) and settle payment and receipt,” Gandhi mentioned.

When a vast segment of people will start using crypto assets as a designated payment then it will become a matter of concern for financial authorities. After big corporations, countries, and powerful people came out in support of cryptocurrency, the countries, those who were against this are also striving to make a framework for it. 

As per many media reports, the Indian government is also thinking of accepting cryptocurrency as an asset or commodity. It may also come up with a way to define cryptos as per their use cases such as payments, investment, or utility. Communicating his concern about the possible financial transaction using crypto, Gandhi said, “Then the question will arise, whether financial transactions will be possible or not using crypto. Right now it is not very clear. Here, we can have an open mind about how financial transactions will take place through crypto-assets. I don’t have any research to ensure that, so, I believe that even crypto assets would be responsive to monetary action.”

Recently, former RBI Governor and a top economist Raghuram Rajan spoke about the potential future of cryptocurrency, mainly Bitcoin in India. Rajan expressed his positivity towards well-regulated stable coins, which are virtual currencies connected to a fundamental asset like currency or gold. 

Shedding light on the roots of cryptocurrency, Gandhi stated, “Originally, it came out of the suspicion about authoritarian currency, and in a sense, the philosophy was to some anarchist disruption. The idea was that this is money, which could not be taxed or traced. But the principles have completely changed. Now, more and more people are trusting in it and they want to deal in it legally,”

India’s Bitcoin market increased from $923 million in April 2020 to $6.6 billion in May 2021, according to blockchain analytics firm Chainalysis. The data also disclosed that India observed a 612 percent growth in crypto investment year-to-year.