INDIA AND THE REGULARIZATION OF CRYPTOCURRENCY
While, most of the countries like the United States, Canada, Australia, Japan, South Korea, etc. have regularised cryptocurrencies in their jurisdictions, cryptocurrencies or digital currencies remain unregulated and still, a grey area in India. The topic has been in debate for quite long now, but the Indian Government is yet to come out clearheaded on the same.
In 2018, the Reserve Bank of India (‘RBI’) had prohibited virtual currencies, including Bitcoins, while directing banks and financial institutions not to deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling virtual currencies. However, the said ban was lifted by the Supreme Court of India in March 2020, pursuant to the petition filed in the case of Internet and Mobile Association of India V. Reserve Bank of India.
In the 2021 Budget Session of the Parliament, the Government was to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 (‘Bill’). The Bill primarily aims to create a state-backed digital currency issued by the RBI, while banning private ones like Bitcoin, Ethereum, Litecoin, etc. However, the bill is yet to see the light of the day.
Recently, the Ministry of Corporate Affairs vide its notification dated March 24, 2021 (‘Notification’) amended Schedule III of the Companies Act, 2013 which became effective from April 1, 2021. The amendments lay down certain general instructions for preparation of balance sheet and statement of profit and loss of a company, making it mandatory for companies dealing in virtual currencies to disclose the amount of crypto they hold in their balance sheets along with a disclosure of profit or loss incurred on crypto transactions. This amendment further indicates recognition of crypto assets as a separate asset class.
Despite the threatened ban and the current uncertainties prevailing in the Indian market with respect to cryptocurrencies, the crypto industry is booming in India with huge trade volumes and investments being made by the Indian investors. Ban or no-ban, the stakeholders have been constantly eyeing on every move of the Government as far as regularization of digital currencies in India is concerned. Regardless, with this Notification, cryptocurrencies in India finally seem to see the light at the end of the tunnel and so do the concerned stakeholders.