The Need For Sound Regulations To Streamline Crypto Currency In India
The crypto market has grown rapidly in the last few years, with it generating an equal amount of growth and interest for investors. Such has been the rapid rise of the crypto-currency, that despite the pandemic taking a toll on the financial and investment markets, its value has risen manifold in the last year. Crypto-currency, though highly volatile in nature has the ability to take the investment market by storm, resulting in lucrative trading and investment options for investors. That being said, a blanket ban on crypto-currency may backfire on the Indian economy, at a time when the country is grappling with a slow-growing economy.
Until hitherto, there has not been any regulatory framework to streamline crypto-currency in India. The country has always been on high alert about the use of crypto-currency and its validity. Hence, this has hindered the process of structuring compliance laws for using digital currency in India. There are various reasons for this aversion; There is a high chance of crypto-currency being used for corrupt practices, which may include funding for terror activities, eluding taxes, money laundering, and the likes. Other severe concerns may also involve the protection of consumers and investors over transactions, buying, and selling of goods using cryptocurrency. Regulatory lapses due to oversight are also not completely off the table. Given all these issues, the government is quite prudent and skeptical about the use of crypto-currency in India.
Though all these seem like persistent problems, having no regulations in place may do more harm than good. For instance, imposters and fraudsters can continue to buy and sell cryptocurrencies over the darknet or at an unregulated marketplace. Which will make it difficult to identify such fraudsters and cyber-criminals, thereby allowing them to walk scot-free and unpunished. Thus, it is necessary to have a sound regulatory framework that can be enforceable by the law. This will also give a certain level of financial freedom to investors to invest in digital currencies without any hesitations. Having no regulations in place will only amplify the shadow market, thwart the adoption of blockchain, and prevent the regulatory bodies of the country to have control on any unpleasant results that might arise from the illicit use of digital currencies.
The foremost thing that India needs to do is define crypto-currency and what does it stand for in the Indian financial market. Secondly, the government must set up registration and operational rules for all local and homegrown crypto-currencies and their allied exchanges/ networks. As a part of their regulatory framework, the inclusion of accounting standards, consumer verification, cutting-edge techniques to identify fraudulent activities, and categorizing digital currencies as current assets are a must.
Besides, it is necessary to treat crypto-currency just like any other currency in the market and to ensure its parity it must be taxed both directly and directly. By doing so, it will bolster the growth and innovation of crypto start-ups present in the country. Furthermore, the government must introduce laws that would enable ingenious use of crypto in the country which would further lead to the growth of this financial asset. Lastly, in order to ensure transparency and accountability implementing self-regulatory.
Rules and a certain code of conduct is unavoidable requisite. If the government closely scrutinizes these options, it will be easier and simpler to regulate crypto-currency in India.
