The planned measure aims to monitor virtual currency transactions if the government decides to regulate this financial space.
Cryptocurrency exchanges in India have been proposed to be classified into three categories: those that act as facilitators, brokers that allow buying and selling, and trading platforms that provide an interface for trading.
Reports suggest that the government will introduce a cryptocurrency bill in the winter session of Parliament.
Government Seeks To Regulate Crypto Exchanges in India
According to the India report from the Bussiness Standard, the government is working to regulate the growing cryptocurrency industry. Currently, it is said that he would try to take them to the level of electronic commerce platforms.
This move will put Indian cryptocurrency exchanges under the Goods and Services Tax (GST) regime that will lead them to impose new taxes. However, the taxes collected can be subsequently offset according to the tax liability of each investor.
India has strong support for cryptocurrencies among its citizens. New cryptocurrency exchanges are popping up in ever-increasing numbers. However, the regulatory scenario remains uncertain due to the government's lack of clarity on the matter.
Recently, the Indian government held a high-level meeting with cryptocurrencies on its agenda. While an earlier bill was expected to ban the circulation of cryptocurrencies in the country, the government's recent stance became extremely lenient.
Furthermore, the popularity of cryptocurrencies in the country encouraged local exchanges to run rampant ad campaigns on all local media broadcasts.
However, with the possibility of upcoming regulations, which could add some restrictions to cryptocurrency advertising, several major exchanges have decided to refrain from running their ads.
Future of India Cryptocurrency Exchanges
Cryptocurrency exchanges in India are growing in number, and the government is concerned that there is currently no comprehensive regulation to generate taxes on them.
Meanwhile, any clear decision on the legal status of cryptocurrencies has kept stakeholders waiting for a long time.
The Governor of the Reserve Bank of India, Shaktikanta Das, has repeatedly expressed concern about these virtual currencies, calling them a "serious threat".
He has also mentioned the doubts he has about the number of registered cryptocurrency investors and the market value claimed. Meanwhile, the Prime Minister recently chaired a meeting on cryptocurrencies where the government's approach was progressive and forward-thinking.
However, a Parliamentary Standing Committee on Finance has also recently held discussions with various stakeholders on cryptocurrencies, to discuss the pros and cons of these so-called virtual currencies. The Indian government still has a long way to go in terms of the future of exchanges and their corresponding regulation.
Indian Crypto Exchanges Figures
India, Vietnam, and Pakistan are helping lead the expansion of cryptocurrency markets in Central and South Asia, according to Chainalysis.
India's market grew 641% over the past year and Pakistan's 711%, a report from Chainalysis showed, using a metric that estimates the total cryptocurrency received by a country.
India has a 59% share of the activity that takes place on decentralized finance platforms (DeFi), with Pakistan at 33%, according to the report, adding that there has been a significant increase in entrepreneurship related to cryptocurrencies and venture capital investment in the region.
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