Although Indian cryptocurrency is legal in the country, the government has seemingly been making it difficult for exchanges to operate. Cryptocurrency or digital currencies are not regulated, and the laws regarding it has always been unclear.
There has also been a lack of clarity when it comes to the tax status for cryptocurrencies, with the Income Tax Department in India stating that crypto profits should be considered as capital gains in terms of taxing.
Here’s a closer look at the Indian crypto regulation.
Cryptocurrency Exchanges
While the Indian cryptocurrency exchange in the country has been technically legal, the regulations of the country in terms of exchanges in digital currency have grown harsher over the years. The Reserve Bank of India (RBI) has already banned banks and any other regulated financial entities from using virtual currencies back in April 2018.
The sweeping regulation forbids cryptocurrency trading in domestic exchange transactions. The RBI set a date limit for existing exchanges to wind down until July 6, 2018.
On the other hand, the government of India also seems to be looking at possible less prohibitive laws and regulations in terms of Indian cryptocurrency. The Special Secretary of Economic Affairs started a committee in 2017 to help come up with ways to help protect consumers from related issues of cryptocurrencies. Reports have suggested that the committee is on the way to drafting the new legislation that aims to protect the common man when it comes to cryptocurrency risks.
Residency Program in Estonia
With the harsh regulation of crypto exchanges in India, a lot of crypto startups have been moving away from the country in recent years, which hasn’t helped in the country’s enthusiasm. One analyst has said that a lot of talented people and companies in the blockchain world are moving out of India towards countries that offer better opportunities and have realized the importance of the blockchain ecosystem.
Estonia, in particular, has become a favorite country of those migrating from India and looking for better opportunities in the blockchain world. In fact, Estonia has been attempting to draw Indian crypto startups and others from across the world for several years now. Estonia launched its e-residency program in 2014, making it easier for startup companies to register themselves in the country.
In addition, representatives from Estonia have also been holding sessions in India with hopes to attract about 200 startup companies from the country.
Despite the government’s discomfort when it comes to cryptocurrency exchanges, the RBI has been looking to launch their own digital currency using the blockchain technology as they have also been promoting the use of blockchain according to reports.
