The Indian crypto industry has been awaiting a taxation framework that considers different aspects of crypto assets. Such taxation announcements could give more clarity to crypto companies on the categorization of crypto assets under the ambit of financial laws in India. On top of that, crypto assets need to be regulated and managed under a specific Department of Finance.
A digital assets-related public policy could bridge the gap between private/public sector banks and crypto-assets exchanges. Expanding the scope of the law and implementing it for foreign crypto-asset entities who are doing business or planning to do business in India could be helpful. These entities should also follow the same local judicial processes. That will help streamline checks and balances using appropriate regulatory guidelines.
Here are a few expected regulatory norms to follow:
- Transparent listing process for everyone to follow to negate fraud or bad coins from being listed and help protect the consumer
- Anti Money Laundering Regulations: Intermediaries should be required to comply with existing regulations under the Prevention of Money Laundering Act (PMLA, 2002), regulated by SEBI. Under this, businesses will have to comply with KYC/AML/CFT standards. If intermediaries follow PMLA, then exchanges can become regulated entities and share the relevant information with Law Enforcement Officials. In addition, the guidelines for AML include mandatory KYC processes for all customers. That would further require intermediary access to the KYC database. Currently, exchanges do not have access to KYC databases to verify users.
- The separation of trading assets and assets in custody could be explored to ensure transparency and accountability for intermediaries. To provide liquidity in the domestic market, it is necessary to allow cross-border transactions since most crypto assets are ‘mined’ abroad.
- Based on the Foreign Exchange and Management Act, 1999 (FEMA), the import of crypto assets from foreign jurisdictions should only be routed through approved crypto brokers and exchanges.
- To comply with the FEMA regulations like the Local, intermediaries, brokers, and exchanges can also be allowed to report the value of such cross-border transactions on the Foreign Exchange Transactions Electronic Reporting System (FEATURES) as mandated for the current Authorized Dealer banks.
What do you need to know about crypto before investing
Crypto is a form of digital asset that enables users to transmit value in a decentralized manner using its underlying technology i.e.Blockchain.
This is a distributed ledger technology that permits transactions to be gathered into blocks and recorded with time stamps.
How should you start your crypto investment journey?
Before investing in crypto, you should get your crypto basics right and know more about blockchain and its use cases. There is a specific term for beginners in the crypto ecosystem, which is known as “Do Your Own Research (DYOR)”. That means – be responsible and educate yourself before buying any crypto coin or token.
For better crypto understanding and learning, WazirX has launched a free blockchain certificate course in collaboration with the public institution Gurukula Kangri. You can sign up for this course and make smart investing choices.
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