The Indian government will reportedly implement a regulatory framework for operating with cryptocurrencies by February next year. Instead of a complete ban, this time, the authorities will debate whether to accept bitcoin and the altcoins as an asset class.
The world’s second most populated nation is one of the fastest-growing markets for cryptocurrencies. However, the Indian government (with its controversial approach towards the matter) causes confusion on how locals can operate with digital assets.
Earlier in the year, the authorities planned to impose a total ban similar to the one in China and even criminalize the ownership and mining of cryptocurrencies.
The government started softening its stance ин the next few months, and the upcoming regulations might not be so harsh. According to a recent report , the legal framework on bitcoin and the altcoins will see the light of day by February 2022 to clarify the taxation of transactions and gains. Surprisingly, the authorities will even discuss the option of accepting cryptocurrencies as an asset class.
A spokesman at the Finance Ministry explained that enforcing certain laws on the industry is vital because the popularity of the digital assets in India attracts bad actors who could employ them in dubious activities. New rules could enable the authorities to stay on top of such operations:
“What should not happen tomorrow is that if I start a personal digital currency, and after good marketing everybody buys it and once it has appreciated, I run away since I am a private player! Everybody has actually bought that currency by using other assets. The government needs to look at regulation in order to avoid the above.”
Listening to The Experts
If India decides to treat crypto as an asset class, the move could boost the country’s economy. At least, that is what the Indian billionaire Nandan Nilekani said a few months ago.
The entrepreneur agreed with many critics that digital assets are not suitable to be used as a payment method as their fiat currency value is quite volatile and some of them consume too much energy. He instead opined that investors should consider them as a gold substitute, for example:
“Just like you have some of your assets in gold or real estate, you can have some of your assets in crypto. I think there’s a role for crypto as a stored value but certainly not in a transactional sense.”
The interest in cryptocurrencies has indeed skyrocketed in India lately as locals increased their digital assets investments from $200 million last year to $40 billion this year.