After a massive confusion that followed Arun Jaitley’s statement on cryptocurrencies at the Budget 2018, regulating bodies are finally providing some clarity on the current situation.
Economic Affairs Secretary Subhash Garg-led panel is expected to submit its report that will contain regulations and explanations on how to deal with cryptocurrencies by April.
Cryptocurrency is an algorithm, which lacks sovereign backing. It is akin to a Ponzi scheme, but there could be a time in future when sovereign currencies are in an algorithm form, Business Standard quoted government official saying in its report.
The panel was set up in December last year to study the impact of cryptocurrencies and come up with recommendations to regulate them. Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi and Reserve Bank of India (RBI) deputy governor BP Kanungo are also members of the committee.
“We hope that within this year, the committee would finalize its recommendations and then it would require legal changes, regulatory assignments, but certainly there will be regulations,” Subhash Garg had said earlier.
Last week Sebi Chairman Ajay Tyagi said that he first wants a policy on cryptocurrency to be formed. The government is awaiting regulations from committee and roles various regulators will play.
After mid-December, the value of cryptocurrencies slumped. The concerns have been raised about its volatility and potential threat to be used as ponzi schemes.
As per the chairman of Central Board of Direct Taxes (CBDT), Sushil Chandra, almost 4 lakh people have invested in cryptocurrencies, through illegal means. It found Rs 100 crore investment had been done, which are not from disclosed sources. It has sent people notices and those people who haven’t invested in the proper way will be taxed.
Last month, the Registrar of Companies (RoC), under the Ministry of Corporate Affairs, has stopped registering cryptocurrency exchanges under the Companies Act, 2013. At present, there are around 15 bitcoin exchanges in India.
Besides RBI and India’s Finance Minister, the head of the World Bank, Jim Yong Kim, compared cryptocurrencies to Ponzi schemes. In a report, Goldman’s Steve Strongin expressing his concern said the lack of intrinsic value might lead to zero value of cryptocurrency.
However, many experts in the industry hail it as the potential currency to redefine global finance.
Earlier in his Budget speech on February 1, Finance Minister Arun Jaitley had said that cryptocurrencies are not a legal tender.