With Bitcoin, Ethereum and other cryptocurrencies taking the market by storm with their rising prices, the demand for its regulation has gained momentum. Here are key things that India and Indians can achieve with the crypto regulations.
More investment for exchanges
Domestic and foreign – the regulations of crypto trading are likely to bring both types of investment in the country. The regulations help in building the confidence of consumers across any sector in the market and they feel secure about investing their money. India’s emergence as the home to leading cryptocurrency exchanges like PCEX Member is a positive signal about the acceptance of cryptocurrency as a security asset for trading. The regulations will pump more money from retail traders as well as institutional traders like banks and hedge funds.
More revenue for the government
The regulations will make crypto trading a service that will become taxable as per the GST law. It will create an extra source of income for the government. Needless to say, the crypto exchanges will also be contributing through corporate taxes. Investors earning through crypto will again be paying income tax over their earnings. Though the field of “Income from Other Sources” in the ITR form still has the option, most of the crypto trading population feel not comfortable disclosing it there citing the uncertainty.
The development will also enable law-abiding citizens to invest in cryptos in a worry-free manner. The new revenue generation tool will add to the public exchequer. In absence of regulation, the government is losing revenue on all fronts.
Contain abuse of cryptos
Due to the absence of an ombudsman, cryptocurrency trading has once become a safe haven for gamblers, drug peddlers, or similar people who were involved in illicit trades. They used it to anonymously transfer funds to favor or fund things that were not legal.
The RBI notification dated April 6, 2018, restricting banks to deal with the crypto exchanges and consumers to register their bank accounts with exchanges was intended to stop the misuse of cryptocurrency as money-laundering instruments to favor illegal activities. The supreme court later, on hearing a case the Internet and Mobile Association of India Vs Reserve Bank of India repealed the notice citing an article in the constitution that gives liberty to its citizens to adopt a business or do anything that is legal for their livelihood. The conflict between the two highest constitutionally established institutions indicates the need for the regulation of cryptocurrency rather than putting a blanket ban on it. The regulations can help in checking crypto trading abuse.
Boost to Consumerism
The regulation of cryptocurrency will also favor its adoption in online retailing. One such use case is the payment option on the eCommerce portal. Vendors will be happy to apply it in their stores to allow customers to pay for goods or services in cryptocurrency. India is the third-largest country by purchasing power parity (PPP), so even if a small fraction of consumers start using it, the resulting conversion rate and sales volume can make a big difference to online businesses.
Boost to Innovation
The regulation of cryptocurrency will make blockchain applications part of health, governance, IP management, and finance, besides other sectors. The robustness, scalability, and decentralization attributes of blockchain have the potential to foster the next level of digital transformation across government, for-profits, and nonprofits. It will bring more accountability and transparency and put an end to the middleman’s obstructions or delays in the delivery of services. Visionary leaders like Andhra Pradesh Chief Minister N. Chandrababu Naidu have set an example by using blockchain technology to address cybersecurity issues in e-governance.
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