The Economic Times reported on Thursday that the new draft bill that the government has given a shape to proposes to compartmentalise virtual currencies on the basis of their use cases.
The bill is expected to specify tax treatment for the new age asset class, which will be clearly classified in the books of law.
This would be the first time that the cryptocurrencies will be categorised as per the technology used by them, but the government’s focus would be based on the end use of the asset class for regulatory purposes.
The move can be a morale booster for crypto investors, which will increase the education, awareness, investment and acceptance of cryptocurrencies, industry watchers said.
Industry experts and exchanges are positive on the development and are welcoming the government’s intentions. However, they are awaiting the bill for more clarity on the concerns they have.
Here is what industry experts and exchanges have to say:
Nischal Shetty, Founder and CEO, Wazir X, said categorising crypto is critical to having the right kind of regulations in India. Crypto is primarily classified into four major categories globally: asset, utility, currency and security. “This step is very positive for the crypto industry and I’m glad that the government is taking this direction towards crypto regulation,” he said.
“This will bring more clarity for the entire industry and push more entrepreneurs into this sector. It will reduce the fear of VC investors wanting to invest in the crypto industry in India. For retail investors and traders, this will again boost confidence and bring in a sense of stability. The current regulatory uncertainty is not helping anyone. We look forward to this positive direction from the government,” he said.
Edul Patel, CEO & Co-founder of Mudrex, said the government plan to draft a crypto bill that recognises cryptocurrency as assets is a giant leap in the right direction. “The drafting of the crypto bill with due consideration and brainstorming could be a game-changer for the crypto industry in India,” he said.
“The idea of compartmentalising cryptos on their use cases is thoughtful, and if implemented efficiently, would be a significant boost to the newly recognised asset class. It also shows that the government acknowledges that cryptocurrencies are much more than speculative instruments and have actual use cases,” he said.
One of the most significant advantages of such an idea would be the increase in awareness among retail investors. Such a draft would help increase participation from investors who are still hesitant to participate in the crypto market.
Hitesh Malviya, founder,
itsblockchain.com, said cryptocurrencies are designed to serve different business use cases of blockchain technology. “It’s a great move by the Indian government to acknowledge that, and take steps into the categorisation of cryptocurrencies. It’s a mature, and very well thoughtful step by the government,” he said.
Categorisation of cryptocurrency will help investors understand the working and use cases of cryptocurrencies so they can make the right investing decisions for themselves. The step will also protect investors from different cryptocurrency-related scams.
Avinash Shekhar, Co-CEO, ZebPay, said having a clear regulatory framework around cryptos would help investors, businesses and entrepreneurs to confidently participate in this industry. “We’re looking forward to the forthcoming guidelines and policies from the government. We hope cryptos will be classified as an asset class and there will be laws in place on their taxation just like the other financial markets,” he said.
There are thousands of different cryptos in the market with different use cases that work on different blockchain platforms. “We’re sure policymakers will look into how they can be used both as an asset class and also take advantage of the underlying blockchains for their use cases to improve India’s infrastructure needs in various industries,” he said.
Having clear laws will have a positive impact on investors. “Crypto assets are still in their early stages and with clear regulations, we hope to see more Indian investors confidently come forward to take the benefits of an early market,” he said.
Vikram Subburaj, Co-Founder and CEO, Giottus Cryptocurrency Exchange welcomed this step from the government. “Just like the internet, cryptocurrencies have multitude of use cases and hence a nuanced approach is best rather than a one-size-fits-all policy. Even among the top 20 cryptocurrencies, there is a wide difference in objective and investor appeal,” he said.
“Just the way India has separate laws governing e-commerce companies, social media companies, fintech companies and some laws like data privacy are applicable to all internet apps, we can have a base law that is applicable to cryptocurrencies while compartmentalising them by use case,” he said.
Subburaj said only when the law is passed can one identify which segments will benefit and which segments may not. “However, from an exchange perspective, we are more than willing to enact the required changes as long as we get clarity and the timelines to enable this,” he said.
