On July 2018 the Reserve Bank of India (RBI) has created a cryptocurrency banking ban wherein people were prohibited from dealing with cryptocurrency exchanges by any local banks working with the central bank. The general public however, misinterpreted this as an outright crypto ban. This has also caused confusion about their tax liabilities and whether or not they should pay them.
In relation to this, India’s Central Board of Direct Taxes, issued 100,000 tax notices to cryptocurrency traders and investors. The reason being that they “felt” that profits made from cryptocurrency investments were a taxable event, according to Chairman Sushil Chandra.
The reason for the ban is that the government is concerned that cryptocurrencies may be used for money laundering, terror financing and other illegal transactions. They are also worried of the impact it will have on the Indian Rupee.
Before the ban, the Reserve Bank of India actually considered launching its own fiat-cryptocurrency called the Lakshmi coin, back in September 2017. However, they ended up going with the crypto ban instead.
Despite this ban Indians have not stopped using popular cryptocurrencies like bitcoin on peer to peer exchanges like Paxful. Some Indian users sell bitcoin in over the counter trades and receive cash in return, this process however violates the RBI ban too and leaves the RBI with no means to detect the transaction. However, traders on the internet hide such trades by creating fake invoices.
One trader reported to newsbtc, stating “Many a time, we have to create fake invoices for crypto transactions exceeding Rs 49,000 (~$711). Generally, we make it look like IT support services.”
She also added that they were forced to take these measures because of the lack of cryptocurrency regulations.
On February 2019, the Supreme Court of India gave the government four weeks to draft a cryptocurrency framework that would describe the legal landscape of the cryptocurrency market in India.
That case by the Supreme Court will determine the faith of cryptocurrency in India and is set on March 29, 2019. According to Indianweb2, the government-formed committee is leaning towards legalization but with strict guidelines and strong riders.The outcome of this case would help India’s general public to finally get some clarity on crypto regulation and investments.
If the crypto ban gets lifted there are a lot of crypto-based start-ups lined up to enter India’s markets. An Indonesian startup called Pundi X is one of them. Pundi X plans to launch a point-of-sale network in India so that people can buy and invest in crypto both online and offline.
Another interested company is Facebook, who is reportedly said to be planning to launch its own cryptocurrency called Stablecoin and wants India to be one of the first remittance markets that Facebook will be focusing on. Stablecoin aims to let users transfer money from the popular messaging app called WhatsApp.
What do you think will be the result of the case set on March 29? Will the crypto ban finally be lifted? Share your thoughts in the comments section down below!