According to reports, the Indian government has proposed a ban on using crypto for payment purposes and has also set a deadline for declaration of crypto holdings for investors. Anyone who violates the policy will be arrested without a warrant and will not be issued bail. Furthermore, the crypto bill may also include a uniform process of know-your-customer (KYC) measures for all crypto exchanges. The crypto bill is still awaiting its turn for discussion in the winter session of the parliament in India, but this hasn’t stopped reports from flying around about what the bill contains, especially everything that hasn’t been made public by the government.
It had been reported on Tuesday that while crypto assets would come under regulation, the government does not plan on permitting the use of digital currencies for payments. According to the proposed legislation, the rules will be ‘cognizable’. The summary of the bill said that the Indian government would generally prohibit all activities by people on generating, mining, selling, holding or dealing in digital currencies as a store of value, medium or exchange or a unit of account. This means that even though India may not follow the steps of El Salvador and adopt cryptocurrency as legal tender, it does mean that the digital currencies will be regulated in the country.
However, the source also disclosed that a ban was also likely to be imposed on self-custodial wallets. But, doing so may be difficult, as elaborated by the chief executive of a prominent Indian crypto exchange. He had recently discussed what he believes the new crypto legislation hopes to accomplish and what he is expecting in the case of self-custodial wallets. The Indian government may also set a deadline for allowing investors to declare their crypto assets in order to comply with the new rules, as reported by people familiar with the matter.
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Furthermore, reports indicated on Wednesday that crypto exchanges would also be required under the proposed legislation to share the data they accumulate via know-your-customer (KYC) with government agencies and regulators, including the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and the income tax department. It was also reported that a uniform KYC policy will be applicable across all crypto exchanges, as all exchanges currently appear to have their own procedures. As far as crypto taxation is concerned, the government plans to add crypto to the Income Tax Act’s Section 26A in the upcoming budget.
This will require taxpayers to disclose their crypto assets not just in India, but abroad as well. It had been reported by local media last week that the cabinet note of the government had named the SEBI as the regulator for overseeing all crypto activities in the country. Moreover, last week, Nirmala Sitharaman, the Indian Finance Minister, had also confirmed that they had reworked the crypto bill from the original, as the latter had sought to impose a complete ban on digital currencies, including the likes of Bitcoin and ether. She had also given answers to a number of parliamentary questions about the proposed crypto regulation.
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