The author is CEO & co-founder of Giottus Cryptocurrency Exchange
2021 has been an eventful year for cryptocurrencies globally. El Salvador, a central American country, became the first to accept Bitcoin as legal tender. Many developed countries such as the US, UK, Japan and Australia have established rules and regulations to manage the exploding crypto ecosystem and the financial implications they present in their countries. In India, however, we are still awaiting clarity on how cryptocurrencies are treated from the lens of the Government and what protection is afforded to the millions of Indians who already have gained exposure as an investment. In this article, we argue why regulations are good for the ecosystem and how crypto pioneers are already preparing to adopt them.
In India, we have witnessed a mini revolution in 2021 with more than 15 million investors having an exposure to cryptocurrencies via registered exchanges. While most of them have grown their wealth considerably, they are always in an uncertainty with regards to its treatment and protection. If regulations kick in, investing in cryptocurrencies will likely have protection that exchanges and other companies must extend. These come in the form of improved record keeping (such as know your customer (KYC)) as well in the form of insurance that the industry can now legally underwrite from established players in India.
The crypto ecosystem hasn’t always enjoyed support from banks and the RBI. This has led to undesirable experiences for the investors given charges that payment gateways take as well as many failed transactions with money struck in limbo sometimes. Having regulations will change this – consumers can deposit and withdraw INR in a jiffy at their convenience and exchanges can partner with multiple banks to smoothen the flow overall.
It is often an under looked aspect of crypto investing. Many investors are unaware of how and when a crypto asset is classified and taxed. Defining a taxable event is the first step that regulations will bring in. For example, do capital gains only apply on INR withdrawals? In some countries, interchanging value between cryptocurrencies is also a taxable event.
Also, are cryptocurrencies commodities? Can they be used for payments? Should every transaction be taxed according to Indian GST slabs? There are many questions that need answering.
Given the lack of regulations, many bad actors have emerged in the ecosystem doing multi-level marketing (MLM) scams and other illegal methods to cheat gullible investors. Regulations will ensure that credible exchanges that follow all KYC as well as anti-money laundering (AML) norms with digitized record keeping become the gatekeepers of crypto for investors in India. They will also make the wider public aware of scams and give them better and convenient ways to invest in peace.
Crypto based businesses in India will thrive if regulations support their initiatives. More companies will register in India and create millions of jobs in return driving global innovation and leadership.
Overall, regulations are good. We want it sooner rather than later.
Disclaimer: This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.