India, the nation known for its love of Gold, is working on a new way to regulate cryptocurrencies. The country is reportedly putting together a bill that will compartmentalize cryptocurrencies on the basis of their use cases.
An economic times report revealed that India is planning to regulate cryptocurrencies as commodities based on use cases.
“Cryptocurrencies will be treated as an asset/commodity for all purposes, including taxation and as per use case — payments, investment or utility,” the report stated.
The report cited 3 sources as people aware of the development. One of the sources stated, “Crypto assets can be either categorized on the basis of the technology they use or they can be defined on their end-use. So, before talking about how the regulations should work, the government has to spell out what it means by cryptocurrencies. The government is not looking to allow payments and settlements through virtual currencies.”
The publication also adds that the government will decide which cryptocurrencies will be allowed to trade in India.
One of the sources mentioned that this would be the first time cryptocurrencies will be categorized by the technology they use, clarifying that the government will focus on the end-use of the asset for regulatory purposes.
What they are saying
The news of cryptocurrency regulation in India appears to have been well received by the cryptocurrency community in the country. Nischal Shetty, CEO of crypto exchange Wazirx, stated that “This step is very positive for the crypto industry and I’m glad that the government is taking this direction towards crypto regulation. This will bring more clarity for the entire industry and push more entrepreneurs into this sector. It will reduce the fear of VC investors wanting to invest in the crypto industry in India. For retail investors and traders, this will again boost confidence and bring in a sense of stability.”
Vikram Subburaj, CEO of crypto exchange Giottus, used the internet as an analogy stating, “Just like the internet, cryptocurrencies have a multitude of use cases and hence a nuanced approach is best rather than a one-size-fits-all policy. Even among the top 20 cryptocurrencies, there is a wide difference in objective and investor appeal.”
Mudrex CEO, Edul Patel commented, “The idea of compartmentalizing cryptos on their use cases is thoughtful, and if implemented efficiently, would be a significant boost to the newly recognized asset class. It also shows that the government acknowledges that cryptocurrencies are much more than speculative instruments and have actual use cases.”
Investment in cryptocurrencies from India is growing. Chainalysis, a blockchain analysis company, estimated that India’s total cryptocurrency investment grew from $923 million to nearly $6.6 billion roughly over the past year.