Indian Finance Minister says No Plan to Recognize Bitcoin as a Currency, Meanwhile Indians Want Crypto Taxed but Not Legalized
India does not plan to recognize Bitcoin as a currency, said Finance Minister Nirmala Sitharaman on Monday, in response to a question in the Lok Sabha, as per the local report.
When asked whether the government has a proposal to recognize the leading cryptocurrency as a currency in the country, Sitharaman gave a “No.”
On Monday, another minister asked the Ministry of Finance whether the government is aware of the cryptos that are traded in India. He further asked whether crypto trading is legally permitted in India and if the government has allowed crypto exchanges to operate legally in the country.
“Government does not collect information on trading in cryptocurrency. Cryptocurrencies are unregulated in India,” said Pankaj Chaudhary, Minister of State (MoS) in the Ministry of Finance.
Chaudhary further pointed to the Reserve Bank of India’s circular from May 2021 that advised its regulated entities to continue to carry out customer due diligence processes in line with regulations governing standards for KYC, AML, CFT, and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA) and ensuring compliance with provisions under Foreign Exchange Management Act (FEMA) for overseas remittance.
High Court Asks For An Update
On Monday, Bombay high court also directed the Center to update it on the proposed crypto legislation expected to be tabled during Parliament’s ongoing winter session.
The Indian government plans to introduce a new bill, ‘Cryptocurrency and Regulation of Official Digital Currency Bill 2021’, that could bar most private cryptocurrencies.
According to a legislative agenda released recently for the winter session of Parliament, the government will only allow certain cryptos to promote blockchain technology and its uses.
Meanwhile, the direction from the court came as the court is hearing public interest litigation that says in the absence of appropriate legislation, aggrieved persons do not have a redressal mechanism for their complaints.
The petitioner, Advocate Aditya Kadam, said investors face problems as their rights were being violated, and their investments were at risk due to the crypto business being unregulated.
No Legalization Please
Meanwhile, according to an opinion poll, 54% of the people surveyed in India don’t want the government to legalize cryptocurrencies.
More than half of the respondents want the government to tax them like a digital asset held in a foreign country.
The poll was conducted by LocalCircles involving 56,000 people in the last 15 days.
The findings revealed that only 26% of them said crypto should be legalized and then taxed, while the remaining 20% didn’t have a view on it.
“While many Indian citizens have invested in cryptocurrencies, the absence of a robust framework leaves investors open to high risks. This is confirmed by the study findings as 71% of the study respondents have low or zero trust in the same,” said Sachin Taparia, CEO at LocalCircles.
The survey further revealed that about 87% of families don't have anyone trading or investing in crypto assets, while only 1% have high trust in them.
The majority (74%) also believe crypto advertisements are not highlighting risks effectively, and only 5% are in favor of crypto platform continuing advertisements.
Half of the survey respondents (about 51%) also support the central bank rolling out its own digital currency.
Entering The Indian Market
Despite the regulatory uncertainty, Singapore-based crypto exchange Coinstore has begun operations in India. It launched its web and app platform and planned branches in New Delhi, Mumbai, and Bangalore for its expansion in the country.
“With nearly a quarter of our total active users coming from India, it made sense for us to expand into the market,” Charles Tan, head of marketing at Coinstore told Reuters. Tan expects the government to come out with a healthy framework for crypto.
There are an estimated 15 million-20 million crypto investors in India, with total crypto holdings of around 400 billion rupees (over $5.3 billion), according to industry estimates.
The exchange further plans to spend $20 million for hiring as many as about 100 employees for the marketing and development of crypto products and services in the Indian market.
Before Coinstore, CrossTower launched its local unit in India in September. Besides India, Coinstore also plans to expand into Korea, Japan, Vietnam, and Indonesia.