Crypto May be Permitted as Asset, Not as Currency

While the government is unlikely to ban cryptocurrencies, it may take a cautious approach towards such investments, permitting them as assets instead of currencies, reported ’ The Economic Times’. 
 
The Centre may not permit use of crypto as currency to perform transactions but may allow people to hold it like an asset -- similar to shares, gold or bonds, said the ET report, citing people with knowledge of the matter.
 
News reports also suggest that the government may also ban active solicitation from crypto firms, such as ads. Crypto exchanges WazirX and Bitbins have paused their ads. 
 
Speculations have been doing rounds over the inputs likely to be included while drafting the legislation for cryptocurrency. On Saturday, Prime Minister Narendra Modi led a review meeting on cryptocurrency. However, the PMO didn't share any details regarding the meeting.
 
The government held a meeting with crypto industry representatives on Monday, adding onto a series of closed-doors discussions between government and the Reserve Bank of India (RBI) that have taken place in the last few days.
 
This was followed by a Parliamentary Standing Committee on Finance meeting -- led by BJP MP and former Union minister Jayant Sinha -- with industry associations and experts on cryptocurrency.
 
The crypto community has made several representations to Indian authorities asking to be classified as an asset rather than as a currency, in order to gain acceptance and avoid a ban.
 
In both the high-level meetings, as per reports, there was a consensus that cryptocurrency won't be banned but regulated.
 
In the next two or three weeks, a draft of the legislation is likely to be presented before the cabinet for consideration, as per the ET report.
 
Market experts have been demanding regulation of crypto for quite some time now as they fear an unregulated environment with several platforms indulging in over-promising and non-transparent advertisements may mislead investors and result in massive losses.
 
The exchanges are pushing for a regulatory sandbox to fine-tune the regulations, according to the report. The Securities and Exchange Board of India could be designated as the regulator, but no “final call” has been taken  on this issue, as per news reports.
 
RBI governor Shaktikanta Das has openly expressed his concerns over cryptocurrencies, saying there are "far deeper issues" involved in virtual currencies that could pose a threat to the country's economic and financial stability.
 
The government is also working on the taxation aspects and the upcoming legislation is expected to address this. The government is looking to introduce the bill in the upcoming winter session of Parliament.
 

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