The government is considering the introduction of a regulatory regime for virtual or crypto-currencies, such as Bitcoin, that would enable the levy of the Goods and Services Tax on their sale.
The new regime may possibly bring their trading under the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI). The idea is to treat such currency in a manner similar to gold sold digitally, so that it can be traded on registered exchanges in a bid to “promote” a formal tax base, while keeping a tab on their use for illegal activities such as money laundering, terror funding and drug trafficking.
Crypto-currency is a digital currency that allows transacting parties to remain anonymous while confirming the transaction is valid. It is not owned or controlled by any institution – governments or private. There are multiple such currencies — Bitcoin, Ethereum and Ripple are some of the popular ones. Currently, they are neither illegal nor legal in India. “One bitcoin today is worth as much as 60 grams of gold. The market cap for all crypto-currencies has just crossed $100 billion, with most of the increase coming in the past few months. On April 1, 2017, the total market cap was just over $25 billion, representing a 300% rise in just over 60 days,” said a senior government official.
“The discussion on whether crypto-currencies should be banned or regulated has been on for some time. The pros and cons for both aspects were put forth in the meeting chaired by Finance Minister Arun Jaitley last month,” the official told The Hindu .
A proposal to ban such currency altogether was also considered at the meeting, but found few takers among top officials from the Ministries of Finance, Home Affairs and IT as well as SEBI, the Reserve Bank of India, the State Bank of India and NITI Aayog.
Bitcoins were in the news recently when during the two global cyber ransomware attacks — WannaCry and Petya — attackers sought about $300 in bitcoin as ransom. Crypto-currency can also be used for a lot of legal activities depending of which retailers accept such currency.
