CRYPTOCURRENCY: WAY FORWARD (FINQUEST)
India has already taken a major step in legalization ofcryptocurrency. There has been a
new circulation that all kinds of digital currencies and non-fungible tokens that are used
for transaction, money-laundering, need tocomply with the Prevention of Money-
Laundering Act 2002 i.e.; they need to follow up with the ‘know your customer’ (KYC)
system, keep a record of all transactions and reports with the assigned authority.
One of the companies thatprovidesthe user with their own digital wallets isCRYPQUE,
aBlockchainand Web3.0 based company. The companyis developingan application
calledCRYP, which is a crypto-payment application.
Nirmala Sitharaman, proposed to tax digital assets and has increased the debate on the
legality of cryptocurrencies in the country. While many have embraced the decision to tax
virtual currency as it is the first step to recognizing it, the government is yet to pass any
official clarification on this matter of whether currencies like Bitcoin are legal or not in
India.
Based on the various key statements made by the Reserve Bank of India Governor as
well as various government spokespersons including the Finance Minister of the country,
one can conclude that cryptocurrency is illegal, but there is no certain ban on it in
India. They are unregulated but according to the recent Union Budget 2022, the
government of India announced a 30% tax on gains from cryptocurrencies and a 1% tax
deducted at source.
A gazette notification, the Finance Ministry said the anti-money laundering legislation
has been applied to crypto trading, safekeeping and related financial services. After this,
Indian crypto exchanges will have to report suspicious activity to the Financial
Intelligence Unit India (FIU-IND).The move is in line with the global trend of requiring
digital-asset platforms to follow anti-money laundering standards similar to those
followed by other regulated entities like banks or stock brokers.
Virtual digital assets were defined as any code or number or token generated through
cryptographic means with the promise or representation of having inherent value.
The Minister of State Finance, Shri Pankaj Chaudhary, on behalf of the Ministry of Finance
answered the questions by saying, “Crypto assets are by definition borderless and require
international collaboration to prevent regulatory arbitrage. Therefore, any legislation on the
subject can be effective only with significant international collaboration on evaluation of the
risks and benefits and evolution of common taxonomy and standards.”
