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India has been quite averse towards Bitcoins since its commencement. This is due to the preference of traditional methods existing in the country and also security concerns which does act as a deterrent from wide level acceptance. However, the actions taken by the Indian Government is surely kept an eye on by the globe. This is due to the rapidly expanding economy coupled with younger populations having higher disposable income in their hands.
In the latest development, the Central Economic Information (CEIB) of the Finance Ministry has revealed that a government proposal has been submitted for imposing 18% GST (Goods & Service Tax) on Bitcoin transactions in India. Bitcoins will be treated as an intangible asset and GST imposed on the margins generated by the transaction. As per the annual transactions estimated in India, this may generate $1 billion in revenue.
Are Indian Authorities Softening their Stand on Digital Currencies?
Despite cryptocurrencies gaining rapid attention amongst in the Indian audience, regulatory ambiguities continue to impose a hurdle as an investment avenue. A survey conducted amongst the younger age group clearly indicated “law and regulatory ambiguity” as a hurdle towards investments in cryptocurrencies. Clarity is required on the below aspects:
- Active business movements including launch of virtual currency bank which can hold virtual currency in a deposit account and execute transactions
- Transparency on banning of cryptocurrency trading
Statistics have indicated high level of activities in the Indian market. The April-June quarter witnessed an increase of 12% in registrations and increased turnover of 20% in the second and third quarter. The month of October highlighted an increase in trading volume by 21% and 25% increase in the number of users. CoinDCX which is the first Bitcoin exchange in India announced that it had raised about $14mm via international investors.
There have been instances in the past whereby the Indian Government has been in favour of a blanket ban on cryptocurrency trading. However, with multiple aspects within cryptocurrency to consider and the increasing tech-savvy Indian audience could compel the authorities to consider certain aspects of cryptocurrency in the Indian markets.
Though the regulations are considered opaque with high level of resistance, such steps does give hope that a growing economy like India might consider this avenue for investment and perhaps pave the way for other nations to adopt the crypto market.
