Sunday, February 5, 2023

Indian Government May Define Cryptocurrencies As Commodity In New Draft Bill

The crypto draft bill, being prepared by the Indian Government, is likely to define cryptocurrencies and segregate them on the basis of their use cases, according to a report.

The market experts believe that this move by the government could benefit the Indian crypto investors, who have been waiting for a concrete law to regulate crypto trading.

As per the report published by the Economic Times, the Indian Government is planning to define cryptocurrencies as commodities or assets in the new draft bill. 

It further reported that the government might also suggest taxation for cryptocurrencies in a draft bill.

Earlier, it was being predicted that the India Government would bring in a law to ban cryptocurrencies in the country, but nothing like that happened. Till date, the crypto industry has been waiting for clarity on how the government is planning to regulate cryptocurrency.

It has been reported recently, that in the new draft bill the cryptos would be classified as per the technology, they have been using. 

However, while segregating the cryptocurrencies, the government’s focus would be on the end-usage of virtual assets.

The new draft bill may also highlight the tax treatments for cryptocurrencies to easily classify them in the books of accounts. 

One of the sources recently has stated, “The government in its draft bill is working towards defining cryptocurrency and its treatment in various use cases, so that it can be treated correctly in the books of accounts plus it should be taxed in the right manner.”

It has been further clarified by the source that the government is not looking to allow payments and settlements through virtual currencies.

In order to tax or regulate cryptocurrency, it is important to first define whether it is a commodity, service or anything similar to equity, therefore, the Indian Government is planning to segregate them in the new draft bill. 

According to a source close to the development, “Crypto-assets can be either categorised on the basis of the technology they use or they can be defined on their end-use. So, before talking about how the regulations should work, the government has to spell out what it means by cryptocurrencies.”

Why Does Crypto Need To Be Regulated?

Initially, when crypto was introduced in India, not many people were fond of it, because of its decentralized nature the individuals were not able to trust it. If at that time, cryptos would have been banned, it might not affect the market much. 

But in the recent time period, crypto adoption and crypto trading have been increasing in India. Even the domestic crypto exchanges in the country reported a surge in trading volume, therefore, they have requested the government to regulate it, rather imposing a ban on it. 

It is to be noted that numerous times, the Indian crypto exchanges have requested the government to recognize cryptocurrency tokens as digital assets and also, clarify its policy on crypto trade.

Presently, cryptos neither attain a legal status nor have been regulated in India. The bill, which is being prepared by the government would define its future in the country.

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