India, which initially showed a lot of hostility towards cryptocurrencies, has now commissioned a committee that is expected to submit a draft proposal to the cabinet soon.
After El Salvador's historic move to adopt Bitcoin as fiat currency (making it a full-fledged currency - a crazy precedent!), even in India cryptocurrency enthusiasts can breathe a sigh of relief.
Important sources following the industry spoke to the publisher Indian Express that the government has moved away from its former hostile stance towards virtual currencies and much it will likely classify Bitcoin as an asset class soon In India.
The market regulator Securities and Exchange Board of India (SEBI) will oversee regulations for the cryptocurrency industry after Bitcoin is classified as an asset class. The Indian cryptocurrency industry is also in talks with the Ministry of Finance regarding the formulation of a new set of regulations, and industry sources point out that a group of ministry experts are studying the matter. A draft cryptocurrency regulation will likely be presented in Parliament.
The development comes days after the Reserve Bank of India (RBI) in a circular directed the banks to stop avoiding transactions involving virtual tokens citing its previous circular from 2018, as it had been overruled by the Supreme Court. RBI Governor Shakthikanta Das, however, reiterated his doubts.
"We can definitely say that the new committee that is working on cryptocurrencies is very optimistic about the regulation and legislation of cryptocurrencies… A new draft proposal will soon be in the cabinet, which will examine the general scenario and take the best step forward. We are very confident that the government will embrace cryptocurrencies and blockchain technologies". Words from Ketan Surana, chief financial officer and director, Coinsbit, and member, Internet and Mobile Association of India.
A whitepaper by Indiatech suggests that India's adoption of Bitcoin as an alternative asset class is an extremely realistic future. Because of volatile nature digital currencies (prices fluctuate widely on a daily basis) - this document writes - it is complicated to use them as a payment tool. The document also recommended taxing cryptocurrency investments, making them subject to the capital gains tax under the Income Tax Act.
Hitesh Malviya, expert on blockchain and crypto investments, he said: “In my opinion, the Indian government will explore a way to regularize Bitcoin. I don't think India will consider accepting Bitcoin as fiat currency in the near future as it would affect the position of the Indian rupee too much. Accepting Bitcoin as a bonded currency is a good idea for those nations that do not have their own currency or are dependent on the US dollar ”.