New Delhi: The Confederation of Indian Industry (CII) in a statement on Thursday said that crypto or digital tokens should be treated as a special class of securities, meaning that the provisions of the exit from securities regulations will not apply, and a set of rules A new set would be suitable. The context should be developed and applied.
This would mean that the regulatory focus would be primarily on transactions and custody, rather than issuance (except where the issuance involves an initial coin offering (ICO) to the public by an issuer established in India), it said.
According to PTI, the industry body has suggested centralized exchanges and custody providers may be set up in India. Those exchanges are required to register with the Securities and Exchange Board of India (SEBI) and comply with the KYC and AML compliance requirements that apply to intermediaries of financial markets, it said in a bid to keep them legally accountable and secure. should be responsible for. Crypto/digital tokens in the digital wallet offered by the participants.
“In order to support this obligation, centralized exchanges may be required to maintain minimum capital and guaranteed funds, while adhering to investor disclosure requirements, which are determined by regulations from time to time, for trading and investment risks. Regarding,” it said.
It is to be noted that the Official Digital Currency Bill, 2021 on Cryptocurrency and Regulation has been included in the Lok Sabha Bulletin-Part II for introduction in the current winter session.
The Bill proposes to create a facilitating framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI), the bulletin said.
It also seeks to ban all private cryptocurrencies in India, however, it allows certain exceptions to promote the underlying technology of cryptocurrencies and its use.
The Chamber also recommended expanding the treatment of crypto/digital tokens as a special class of securities in relation to the Income Tax Act and the GST Law.
Crypto/digital tokens may be treated as capital asset for income tax purposes unless specifically treated as stock in the business’ by a participant/assessee, it said.
It is also recommended to impose tax reporting requirements on participants investing or transacting in crypto assets (whether through a centralized crypto exchange or otherwise) through specific disclosure in income tax returns.
The Chamber said that regulators and tax authorities should begin building capacity to harness the power of big data and analytics to monitor the digital trail embedded in blockchain networks on which digital/cryptocurrencies/assets move.
In order to protect the interests of the Indian public, the legal power to issue Indian Rupee crypto/digital tokens should be limited to the issuance of Central Bank Digital Currency (CBDC) by the RBI.
Alternatively, it said, if such issuance is deemed acceptable by an institution other than the RBI, such issuance should be subject to the prior approval of the RBI, which is mostly credit-risk-free holding. treasury bills/short term sovereign securities.
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