After the Finance Minister, Nirmala Sitharaman, affirmed that there would not be a complete ban on cryptocurrencies and indicated that a detailed note would be produced citing the working of cryptocurrency in India.
“From our side, we are very clear that we are not shutting all options. We will allow certain windows for people to do experiments on blockchain, bitcoins or cryptocurrency – Nirmala Sitharaman.”
The latest move by the Ministry of Corporate Affairs comes as another assurance to the crypto community.
The MCA recently announced that with effect from 1st April 2021, all Indian companies are mandatorily required to disclose all of their crypto assets. They are asked to disclose the profit and loss on transactions related to cryptocurrencies and the record of deposit/advances received from third parties for cryptocurrency trading in their balance sheet.
Crypto Disclosure Announcement Breakdown
It is certainly an obscure task to regulate something which is not in anybody’s control. However, this amendment is a stepping stone towards the much-anticipated cryptocurrency bill that will answer questions around “ Is Cryptocurrency Legal in India,” which might also hopefully favour cryptizens.
Until then, let’s breakdown the positive implications of the recent amendment:
1. One Step at a Time:
This tug of war situation between cryptocurrencies and regulators has existed across the world. But regulators who were successfully able to regulate digital assets in their regions did so with, one step at a time.
For example, the US also found it challenging to regulate cryptocurrencies initially and tried keeping it away. However, they soon realised that it is neither feasible nor appropriate to do so and found a workaround. India is also moving in a similar direction; this amendment is the first step towards regulating cryptocurrencies.
2. Encourages Crypto Investment
As the amendment comes into effect, it will compel companies to be transparent about their cryptocurrency investments. They will publicly disclose all of their investments in digital assets and the profit and loss involved, which might lure other institutional investors into entering the landscape.
Along with the growing participation from institutional investors, we may also see a boost in retail investors’ participation. The investment from giants in digital assets will encourage them, leading to a surge in the crypto market’s participation.
3. Will Keep Fraudsters in check
One of the objectives of introducing this amendment is to bring transparency to cryptocurrency trading. With this, the government intends to protect investors from fraudsters who entice people with the guaranteed high returns on their investment.
It will give investors clarity on the genuine companies involved in cryptocurrency trading and help keep fraudsters at bay.
The Bottom Line
After the adaptation of this mandate, the cryptocurrency ecosystem in India looks hopeful. It suggests the government’s interest in regulating cryptocurrency, and with the speed that we are moving, we might soon see a concrete framework in place.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
Table of content
Subscribe to Our Newsletter with exclusive content.