India is reportedly working on a new way to regulate cryptocurrencies. “The government is planning to define cryptocurrencies in the new draft bill that also proposes to compartmentalise virtual currencies on the basis of their use cases,” according to a report.
How India Will Regulate Cryptocurrencies
India is reportedly planning to regulate cryptocurrencies as commodities based on use cases. “The government is planning to define cryptocurrencies in the new draft bill that also proposes to compartmentalise virtual currencies on the basis of their use cases,” The Economic Times reported Friday, citing three people aware of the development. The publication detailed:
Cryptocurrencies will be treated as an asset/commodity for all purposes, including taxation and as per use case — payments, investment or utility.
“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,” said one of the persons with knowledge of the matter. The person added that the government “is not looking to allow payments and settlements through virtual currencies.”
In addition, the government will decide which cryptocurrencies will be allowed to trade in India.
This would be the first time cryptocurrencies will be categorized by the technology they use, sources told the news outlet, clarifying that the government will focus on the end-use of the asset for regulatory purposes.
The news of the Indian government possibly considering regulating cryptocurrencies as commodities and based on their use cases is well received by the local crypto community.
Nischal Shetty, CEO of crypto exchange Wazirx, said: “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, opined: “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.”