The Indian government may consider creating a legal framework for digital currencies in cryptocurrencies as “assets” as early as February.
According to a report by Indian news agency Business Today on Tuesday, officials from the country’s Ministry of Finance said that the potential legal framework would link cryptocurrencies more closely to commodities than currencies. If this law goes into effect, it would represent a different approach from the outright ban on the use of digital assets in the country, which some Indian lawmakers are contemplating.
Officials added that any cryptocurrency law in the country is likely to be passed by the time the government presents the Indian union budget on February 1, so that it will come into effect before the next fiscal year. They added that they are in contact with the Reserve Bank of India or the Reserve Bank of India (RBI) to work out the details of any cryptocurrency framework.
Labeling cryptocurrency as an “asset” under Indian law is likely to have tax consequences for the country’s retail investors and stock exchanges. The Indian Tax Service is said to be considering taxing cryptocurrency revenue through trades and exchanges, but at the time of publication, no decision appears to have been taken by anyone in the government.
On the subject: A proposed law banning cryptocurrency is said to be under consideration by the Indian government.
With a population of around 1.4 billion, India, opting to create a specific legal framework for cryptocurrencies, is likely to cause huge ripples across the world. The government has largely failed to take a firm stand on digital currency regulation since the full ban of the Reserve Bank of India was lifted in March. Since then, a number of reports have been circulating, citing government sources, according to which the country’s parliament refuses to pass a new law banning cryptocurrency trading in India and is also considering alternative solutions to regulate digital assets.