While the Indian government mulls a ban on crypto, it’s tightening the screws on existing regulation. The Indian Ministry of Corporate Affairs said on Wednesday that all companies incorporated in India must disclose crypto holdings and dealings, effective April 1.
Executives in the Indian crypto industry representatives told Decrypt that the government’s recognition of crypto holdings is a welcome move, though the rule change shouldn’t be interpreted as hope that the government’s tabled motion for a crypto ban is set to fail.
Implications of the new rule
In addition to crypto holdings, the new rules, which update the country’s Companies Act of 2013, require companies to disclose the total profit or loss on crypto transactions, as well as any deposits or advances received for crypto trading.
Nischal Shetty, CEO of WazirX, a crypto exchange that last month recorded trading volumes of $2.3bn, told Decrypt that the new rules indicate that the government is willing to understand the extent and size of the crypto sector. Zakhil Suresh, founder of crypto fantasy trading app SuperStox, explained that the extra scrutiny on crypto holdings is due to Bitcoin’s price, which is now too high to ignore.
Sohail Merchant, CEO of the Indian crypto exchange PocketBits, thinks it shows that India’s government has come a long way. When he started his company in 2016, it took him several months to get approval for registration as the company documents mentioned Bitcoin—something the government didn’t officially acknowledge at the time. But things are different these days: “Regulators now understand the importance of embracing crypto,” he said.
All Quiet on the Ban Front
The issue that looms large remains the prospect of a potential ban on crypto. In late January, the Indian Parliament tabled the “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.”
The bill sought to ban all “private cryptocurrencies”, save for certain unnamed exceptions (“to promote the underlying technology of cryptocurrency and its uses”).
That initially fuelled much anxiety across the Indian crypto industry. But the industry representatives told Decrypt earlier this month that they breathed heavy sighs of relief when the finance minister appeared to tone down the government's previous position.
Minister Sitharaman said the government would allow “a window of experiment for crypto,” which they interpreted as a change in tone because he mentioned crypto, not just blockchain.
Since things are so tense, any ministerial statement or any new government directive, such as the new disclosure requirements, are examined for hints about how India’s parliament may vote on the crypto ban.
This one is no different.
Sidharth Sogani, who heads the industry pressure group, the Association for Blockchain, Crypto, told Decrypt the new disclosure rules are nothing special. “It’s basic data collection by the government, and it can go either way,” he said.
But any recognition is better than being totally ignored, said Jagdish Pandya, chairman of Block On Capital, a blockchain advisory company. “While this does not suggest a full-fledged regulation through legislation yet,” he told Decrypt, “such small steps still matter.”
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