The value of the world's most popular cryptocurrency Bitcoin crossed $30,000 for the first time during the coronavirus outbreak. With intrigue in digital currencies at a record high, it would be interesting to see what the Union Budget 2021, which will be presented today, has in store for the cryptocurrency industry.
The digital currency platforms in India are quite hopeful that the government will make Bitcoin and other cryptocurrencies interoperable with the current banking infrastructure.
"The business of crypto assets has expanded manifold across India in the last few months. Trade volumes are growing exponentially, and the industry boasts many loyal enthusiasts. In that context, cryptocurrency exchanges could be the first point of regulation by bringing them under SEBI through a structured regulation setup," Darshan Bathija, CEO of Vauld, a homegrown cryptocurrency platform, said.
He added positive crypto regulations will lead to tremendous growth in the crypto space. "Our expectation is that this will further encourage investors to consider cryptocurrency as a viable banking instrument and asset, by making it interoperable with the current banking infrastructure, offering attractive interest rates. Secondly, blockchain as the greatest disruption of the century isn't far from transforming and subverting the traditional financial and banking systems across the globe. In fact, usage of blockchain technology across sectors should be boosted further," he added.
Rahul Pagidipati, CEO, ZebPay, said crypto assets, if properly regulated, could bring tremendous economic benefit. "The government's twin goals of promoting prosperity and protecting people from fraud and harm are our goals, too. That's why we have world-class security, KYC, and AML policies. We hope 2021 will bring healthy regulations for crypto investors, so they can know how to pay taxes correctly and access all the potential of this revolutionary new asset class," Pagidipati said, reported Mint.
The cryptocurrency industry believes the government has recognised the huge potential of blockchain technology and the economic benefits that cryptocurrencies can provide. This is evident from a recent proposal put forward by the Central Economic Intelligence Bureau (CEIB), an arm of the union Finance Ministry, which said the government should impose 18 per cent GST on Bitcoin transactions. The government could potentially gain Rs 7,200 crore annually on digital currency trading, as per the CEIB.
The proposal came after the Supreme Court in 2019 asked the government to come up with cryptocurrency regulation policies. In 2020, the apex court also struck down the curbs imposed by the RBI on cryptocurrency trade in India. The RBI had virtually banned cryptocurrency trading in 2018 and had directed that all entities regulated by it shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling those digital currencies.
Recently, the RBI also stated that it is examining if there is a need for introducing a central digital currency (CBDC) in the country. With intrigue in digital currencies at a record high, it would be interesting to see what the Union Budget 2021, which will be presented today, has in store for the cryptocurrency industry.