Crypto Firms Call for Clearer Regulations from RBI
Cryptocurrency platforms in India call for clearer rules and regulations surrounding business.
With a revival in business, local crypto-platforms are urging the Reserve Bank of India to clarify the rules and regulations surrounding business conduct.
Crypto platforms have approached the central bank for clarity regarding the status of their companies in India, following a marked revival for the crypto industry recently.
Despite the lift on the ban, their continued growth remains a challenge due to lenders denying banking services. This is allegedly due to a lack of clarity and recognition from financial institutions and the regulators themselves.
In line with this, crypto platforms are calling for clarifications on whether they are to be classified as commodity, currency, goods, or a service. This determines the way their businesses get taxed under the Goods and Services Tax (GST) framework.
Apart from the rules and regulations regarding taxation, the clamor for recognition is also far from over, with allegations that banks have not received updates from the Reserve Bank of India (RBI) regarding the lift on the ban.
Sidharth Sogani, the CEO of Credbaco Global, a digital asset research firm, explained that the RBI was to issue a new circular, directing the banks to start relationships once more with cryptocurrency exchanges and companies. However, Sogani alleges that banks have denied receiving any notification from the RBI.
Previously, numerous investigations have been launched on the possibility of incorporating Bitcoins and other cryptocurrencies under the GST.
India’s stance on cryptocurrency has softened significantly in recent months. The nationwide ban on cryptocurrency businesses was implemented in April 2018, with the Central Bank preventing financial institutions from facilitating “any service in relation to virtual currencies.”
The lift on the ban appears to have been welcomed and the local climate towards cryptocurrency looks positive. A survey from Paxful, a Bitcoin marketplace, indicated that most investors aged between 18 to 55 showed that 75% already had experience with investing in cryptocurrencies. The most common use for cryptocurrency was for quick and easy money transfers (78.5%), followed by the respondent’s belief that it is a way to achieve financial freedom (64.8%).
The economic slowdown caused by the coronavirus pandemic has also had an impact on the momentum of the cryptocurrency industry following the RBI’s repeal of the ban.