The legal status of cryptocurrencies is still unknown to the industry, but it is seen as a positive move forward for the digital asset room. Industry participants agree that this would boost institutional investment in the country’s crypto space. Companies must now report their crypto trading and investments during the financial year, according to the Ministry of Corporate Affairs’ most recent notice. The Companies Act’s Schedule III, which regulates the preparation of financial statements for all Indian enterprises, has been amended by the central government.
The following information must be revealed whether the Company exchanged or invested in crypto currency or virtual currency during the financial year: (a) benefit or loss on crypto currency or virtual currency transactions (b) the sum of currency kept as of the reporting date, (c) deposits or advances from any individual for the purpose of trading or investing in crypto currency or the virtual currency, the document said. The new schedule will take effect on April 1, 2021, but Parliament must first approve it.
The legal status of cryptocurrencies is still unknown to the industry, but it is seen as a positive move forward for the digital asset room. Institutional involvement in the crypto space in the region, according to industry participants. This is a major advance toward controlling crypto resources in India, as it will improve straightforwardness in crypto speculation detailing and document. The move will increase institutional acceptance of crypto assets in India, propelling the country’s crypto industry to the next stage of development BuyUcoin’s CEO Shivam Thakral says.
The legal experts, on the other hand, are unable to foresee what has caused this change. According to Sanjay Khan, Partner at Khaitan & Co, the government is looking to gather data on the level of exposure of Indian companies to crypto assets. Some legal experts are concerned that the data collection exercise would be used to launch inquiries into the organisations involved. According to Avimukt Dar, a partner at Indus Law, this reporting exercise, which will also require the approval of external auditors, may be a precursor to future investigations and penalties because the government has not yet defined what calibrated regulation means.
Despite the ambiguity, Sanjay Khan is optimistic that the government will review this data and make a decision on overall crypto transaction and company regulation or taxation. Whenever carried out accurately and with an alert, this should make ready for educated Governmental dynamic and proficient guideline or tax assessment from crypto exchanges and organizations in India, one of the world’s biggest and quickest developing crypto markets, he says. Indians have already invested about $1.5 billion in crypto assets, according to Thakral of BuyUcoin.
Industry players are eagerly awaiting for clarification from the Finance Ministry and the Reserve Bank of India (RBI). Until now, no one has been able to precisely describe private virtual currencies. Despite concerns about the manipulation of customer data and its potential effect on the financial system, governments around the world have been looking at ways to control cryptocurrencies. However, no major economy has gone so far as to impose a blanket ban on their ownership.
