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A cryptocurrency is a type of virtual asset that operates on a network that is distributed among a large number of computers. It is a decentralized form of cryptocurrency that permits it to exist outside of the control of the central government or authorities.
The Lok Sabha debated the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The law aims to establish a favorable framework for the development of digital money issued by the Reserve Bank of India (RBI).
Here’s What the Ministry of Finance Said About the Cryptocurrency Bill in Parliament
The Cryptocurrency Bill was supposed to be introduced in the Winter Session of Parliament in 2021. However, it never happened. The Ministry of Finance was questioned about the Cryptocurrency Bill during the current Lok Sabha session.
The following query was raised: What is the current status of the Cryptocurrency Bill? When will it be tabled and open for comment? Which ministry/department will be in charge of regulating virtual assets such as cryptocurrencies, non-fungible tokens (NFTs), decentralized applications, real estate tokens, and other assets?
On behalf of the Ministry of Finance, Shri Pankaj Chaudhary, Minister of State Finance, responded to the inquiries, saying, “Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage.” As a result, any regulation on the subject can only be effective with major international collaboration on assessing the risks and advantages, as well as the establishment of a common taxonomy and standards.” He later clarified that the policy-related ecosystem and crypto assets are under the jurisdiction of the Ministry of Finance.
During the Winter Session of Parliament, the Indian government planned to propose new cryptocurrency bill or legislation. The Cryptocurrency bill was listed for the second time but was delayed. It happened for the first time during the Budget Session of Parliament in 2021.
All Top Countries Where Crypto Is Legal, Illegal, Or Restricted
Since its inception, cryptocurrency has been a contentious topic. Some governments believe in cryptocurrency’s decentralized power, while others do not. The legal position of cryptocurrency varies per nation.
Cryptocurrency is utilized anonymously to execute transactions between account holders all around the world. This causes currency issues for governments around the world. Because of the lack of supervision and criminal linkages, some officials and legislators may oppose the usage of Bitcoin.
Some nations may have implemented regulations like Cryptocurrency Bill under their anti-money laundering and counter-financing of terrorism laws (AML/CFT) to reduce the use for these reasons.
Let us see the countries in which cryptocurrency is legal, illegal, or restricted.
The United States features a dual governance structure. Different states may have distinct cryptocurrency legislation. For example, New York has been supportive of Bitcoin since 2016, when it introduced the “BitLicense” licensing structure for cryptocurrency and commercial exchanges.
Many states in the United States have yet to adopt a position on cryptocurrencies. The various states have differing rules on cryptocurrencies, but to summarize, the United States has a supportive attitude toward the trading community and is a country where Bitcoin is legal.
The European Union comprises 27 member countries, and the Union’s legislation is highly complex. So far, the majority of European Union countries have chosen a mild regulatory framework for Bitcoin.
The European Commission completed a plan for legislation to control virtual assets in 2020, which numerous firms or organizations inside the Union have endorsed. The Act is intended to prevent the fragmentation of financial regulatory regimes. The commission also ensures that people have access to and may utilize cryptocurrencies safely.
The United Kingdom has not yet enacted any distinct legislation for cryptocurrency regulation. They do not regard it as legal tender, but rather as property. Under the currency system, the Financial Conduct Authority (FCA) administers licenses to permitted enterprises associated to cryptocurrency, including exchanges. They have tight standards, and those seeking the license must strictly adhere to them.
The United Kingdom collects taxes on crypto trading in the same way that it does on paper currency trade. Businesses dealing in bitcoin and cryptocurrency exchanges must adhere to corporate tax regulations.
Canada has a pro-cryptocurrency stance, and the Canada Revenue Agency (CRA) treats cryptocurrencies as an item for income tax reasons. This means that any profit or loss from a cryptocurrency transaction must be declared.
When it comes to cryptocurrency rules, the country has been more motivated than others. It was the first jurisdiction to adopt a bitcoin-traded fund (ETF), and several of them are now listed on the Toronto Stock Exchange.
Crypto exchanges are regarded by Canadians as money service businesses subject to the Proceeds of Crime and Terrorist Financing Act. As a result, the transactions must be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). People can submit specific records, follow compliance procedures, or report any suspicious transactions.
Here is a list of countries where cryptocurrency is banned:
Is Cryptocurrency In India Legal or Not?
In India, there is no central authority that regulates cryptocurrency as a payment medium. There are no norms and regulations, nor are there any standards for resolving issues while dealing with cryptocurrency. As a result, cryptocurrency trading is done at the risk of the investor.
Nirmala Sitharaman, India’s Finance Minister, has proposed taxing digital assets, escalating the dispute over the legality of cryptocurrencies in the country. While many have welcomed the decision to tax virtual currency as the first step toward recognizing it, the government has yet to provide an official statement on whether currencies such as Bitcoin are legal in India.
Based on the several major statements made by the Governor of the Reserve Bank of India as well as various official spokespersons including the country’s Finance Minister, one can assume that bitcoin is unlawful, although there is no specific ban in India. They are unregulated, however, the government of India announced a 30% tax on cryptocurrency earnings and a 1% tax deducted at source in the recent Union Budget 2022.
Cryptocurrency Tax In India: What We Know So Far
One of the most confusing aspects of India is the taxation of cryptocurrency. Initially, there was no Income Tax Act or Goods and Services Tax (GST) in India that defined cryptocurrencies. The Finance Minister has offered a tax regime for virtual or digital assets, which include cryptocurrencies, in the recently released Union Budget 2022.
- Cryptocurrency investors are required to report the calculated profits and losses as a part of their income.
- A 30% tax will be charged on the earnings from the transfer of digital assets that include cryptocurrencies, NFTs, etc.
- Just the cost of acquisition and no deduction will be permitted while reporting earnings from the transfer of virtual assets.
- A 1% deduction of tax deducted at source (TDS) on the buyer’s payment if it crosses the threshold limit.
- If cryptocurrency is received as a gift or transferred it is subjected to tax at the giftee’s end.
- If you face any loss from the virtual asset investment, it cannot be balanced against other income.
The Future of Cryptocurrency Bill
The Cryptocurrency Bill 2021 is a legislative initiative filed in the Lok Sabha by the government to regulate India’s booming cryptocurrency business. The industry has seen a surge in investment in recent years, particularly during the current period, not only domestically but also internationally.
In India, crypto trading platforms such as WazirX, CoinDCX, Zebpay, and others are seeing a significant increase in activity. Even when the government wishes to protect young entrepreneurs and investors, an unregulated crypto market is unfriendly and risky. The government took an official move toward bitcoin regulation by drafting the Cryptocurrency Bill in 2021. The bill attempts to establish a favorable framework for the development of the Reserve Bank of India’s (RBI) official digital currency. It also outlaws all other private cryptocurrencies, with some exceptions to help cryptocurrency’s underlying technology. The government has already taken the step of implementing a 30% tax and 1% TDS on gains from virtual digital assets or cryptocurrency bill in the Union Budget of 2022.
The Cryptocurrency Bill 2021 is still in the works and may take some time to become available for public comment. The Indian government has already taken a step in this direction, introducing taxing on virtual assets in the Union Budget 2022. However, the introduction of the Cryptocurrency Bill is a significant step forward.