Government of India: Companies must disclose their crypto holdings

As the Indian government considers a crypto ban, it is tightening the screws on existing regulations. India’s Ministry of Corporate Affairs said on Wednesday that all companies incorporated in India must disclose their crypto holdings and transactions as of April 1.

Executives from India’s crypto industry said Decrypt that the government’s recognition of crypto holdings is a welcome move, although the rule change should not be interpreted as the hope that the government’s motion to ban crypto is doomed to fail.

Implications of the ban

In addition to crypto holdings, the new rules, which update the country’s 2013 corporations law, require companies to disclose total profits or losses on crypto transactions, as well as any deposits or advances received for crypto trading.

Nischal Shetty, CEO of WazirX, a crypto exchange last month checked in trading volumes of $ 2.3 billion, recounted Decrypt that the new rules indicate that the government is ready to understand the scope and size of the crypto industry. Zakhil Suresh, founder of the fantasy crypto trading app SuperStox, explained that the added control over crypto holdings is due to the price of Bitcoin, which is now too high to ignore.

Sohail Merchant, CEO of Indian crypto exchange PocketBits, believes this shows that the Indian government has come a long way. When he launched his business in 2016, it took him several months to get registration approval because company documents mentioned Bitcoin – something the government did not officially recognize at the time. . But things are different these days: “Regulators now understand the importance of embracing crypto,” he said.

All calm on the ban front

The problem that looms large remains the prospect of a possible ban on cryptography. At the end of January, the Indian Parliament tabled the “Cryptocurrency and Official Digital Currency Regulation Bill, 2021”.

The bill sought to ban all “private cryptocurrencies” with the exception of certain unnamed exceptions (“to promote the underlying technology of the cryptocurrency and its uses”).

This initially fueled a lot of anxiety in the Indian crypto industry. But industry representatives said Decrypt earlier this month, they let out heavy sighs of relief when the finance minister appeared to tone down the government’s previous stance.

Minister Sitharaman said the government would allow “a window of experimentation for crypto,” which they interpreted as a change of tone because he mentioned crypto, not just blockchain.

Since things are so tense, any ministerial statements or new government directives, such as new disclosure requirements, are being scrutinized for clues as to how the Indian parliament might vote on the crypto ban.

This one is no different.

Sidharth Sogani, who heads the industry lobby group, the Association for Blockchain, Crypto, said Decrypt the new disclosure rules are nothing special. “This is basic data collection by the government, and it can go both ways,” he said.

But any recognition is better than being totally ignored, said Jagdish Pandya, chairman of Block On Capital, a blockchain consulting firm. “Although that does not yet suggest full regulation through legislation,” he said. Decrypt, “Those little steps always count.”