Government May Create Barriers to Cryptocurrency Trading and Holding: Report

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Bitcoin, the world’s largest cryptocurrency, hovers around $ 60,000

The government plans to tighten regulations on cryptocurrencies to deter investors from owning them, although the government is unlikely to follow through on an earlier plan to ban private digital coins, according to two sources familiar with the discussions.

Instead, it could allow only those who have been pre-approved by the government to be listed and traded on the stock exchange – an intentionally cumbersome process, said the sources, who asked not to be named because the talks are private.

“It is only when a coin has been approved by the government that it can be exchanged, otherwise holding or exchanging may result in a penalty,” the first source said.

The government aims to introduce and pass a cryptocurrency law during the parliamentary session that begins this month.

Such a pre-verification approach would create obstacles for thousands of peer-to-peer currencies that thrive outside the scope of regulatory scrutiny.

Prime Minister Narendra Modi said on Thursday that all democratic nations must work together to ensure that cryptocurrency “does not end up in the wrong hands, which can spoil our youth” – his first public comments on the subject.

Earlier this year, the government considered criminalizing the possession, issuance, mining, trading and transfer of cryptoassets.

Its position has changed since then, but only slightly, according to both sources, who said significant capital gains and other taxes could be levied to discourage cryptocurrency trading.

A senior government source said investors “should pay more than 40% on all crypto gains so far,” adding that additional sales taxes on goods and services and taxes on securities transactions could be levied in addition to any capital gains tax.

The finance ministry did not respond to an email seeking comment.

Last week, Modi chaired a meeting to discuss the future of cryptocurrencies, as unregulated crypto markets could become avenues for money laundering and terrorist financing, sources said separately. Saturday.

The new rules are also likely to discourage the marketing and advertising of cryptocurrencies, dampen their appeal to retail investors, said an industry source who was part of a separate parliamentary roundtable held on Monday.

The government is seeking to classify crypto as an asset class, as required by crypto exchanges, rather than as a currency, two sources said.

But the senior government official told Reuters the plan is to eventually ban private cryptoassets while paving the way for a new central bank digital currency (CBDC).

The Reserve Bank of India, which has raised “serious concerns” about private crypto, is expected to launch its CBDC by December.

Bitcoin, the world’s largest cryptocurrency, hovers around $ 60,000 and has more than doubled since the start of this year, attracting hordes of local investors.

No official data is available, but industry estimates suggest that there are 15-20 million crypto investors in India, with total crypto holdings of around 400 billion rupees (5.39 billion rupees). dollars).

China’s state planner and foreign exchange regulator, the National Development and Reform Commission (NDRC), said this week it would continue to clean up virtual currency mining in the country, which has hit the prices of cryptocurrencies.

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