Bitcoin, Eth and other cryptocurrencies are experiencing a new wave of popularity in India after the entry into force of the restrictions imposed by the country's central bank. Such a conclusion allows to make courses of cryptocurrency on local exchanges.
Situation at India’s crypto market is the following:
• Currently, 1 BTC at the top stock exchange in India, Zebpay, costs about 490,000 rupees, this price is equivalent to $ 7,100;
• At the same time, 1 ETH costs about 34,500 rupees, that is, more than $ 500;
• According to CoinMarketCap, the batch rate of these two cryptocurrencies at that moment is $ 6,411 and $ 443, respectively;
• Indians are increasingly interested in cryptocurrency.
The government is constantly debating on possible bans and restrictions.
The Reserve Bank of India has banned commercial banks and other regulated financial institutions from servicing market companies whose operations are related to cryptocurrencies and crypto accounts, thus, in effect, cutting off channels for exchanges between digital and fiat currencies. The decision about this policy was made on April 6 and entered into force on July 5.
“Today we disable the possibility of depositing and withdrawing funds in rupees through the Zebpay application. This is done in the light of the closure of bank accounts in accordance with the order of the Central Bank, ”the Zebpay exchange reported earlier to local people
As noted by Trustnodes on the web site, against the background of establishing such restrictions by RBI, one would have expected investor panic and a general fall in prices because of bad news, but in reality the opposite happened. Cryptocurrency trading in India is becoming more and more popular.
Local traders may admit that the ban for crypto currency exchanges is temporary and try to think ahead, assuming that the authorities can devalue their money again. On the other hand, under the conditions of limiting the withdrawal of fiat assets, they have no choice but to buy. Thus, the difference in prices on Zebpay from Western exchanges may be due to technical reasons. The Indian market is different from the Chinese one with its “great firewall” and censorship, therefore, probably, nothing prevents local traders from opening an account on a foreign exchange and going out into dollars through it, subsequently exchanging them for local currency.
“Trading is not a criminal offense. Most of us trade in various asset classes and reserves in the stock market. What is the difference between cryptocurrency trading? ”said a high-ranking government official according to google, adding that the Treasury Department and the State Reserve Bank intends to hold a meeting at which cryptocurrencies can even be recognized as an exchange commodity. “I don’t think that someone seriously thinks about banning cryptocurrency. The problem is in the regulation of trade, and we need to know where bitcoins come from. If we legalize them as a commodity, we can better regulate trade. ”
Business has supported such a turn in politics. “Although cryptocurrencies belong to a new class of financial assets, we must recognize them as commodities, not currencies, because of too large price fluctuations,” said Shubham Yadav, co-founder of Coindelta, a cryptocurrency exchanger in the large Indian city of Pune. “Many countries are already moving in this direction, including the United States. We should advertise and promote this policy.”
In turn, the former Deputy Chairman of the Central Bank of India R. Gandhi explains on his website that it is important to clearly distinguish between the concepts of digital currency as a commodity that is allowed and a means of payment, similar to the cash. The latter must be excluded, he insists. “If tokens are used for transactions, they become currency. This should not be allowed. But if people want to invest in a product at home, this is different, because then we can assume that buyers are aware of the risk events associated with the acquisition and trade of such assets,” he notes in the official information.
India is the second after China Fintech market in the world. According to a study by the auditing company Ernst & Young, the level of acceptance by the population of new money technologies in India is 52%. This is significantly higher than the global level (30%) of loyalty to fintech.
According to Bloomberg, Indian state may soon begin to charge the 18 percent tax on goods and services (GST) on the trade in cryptocurrencies, despite the legal uncertainty of such activities in the country. This proposal is currently being considered by the Central Council for Indirect Taxes and Customs and will be presented to the GST Council after its finalization.
As indicated, a digital asset of litecoins or bitcoins can be classified as “intangible goods” along with other software products, and the body adds that separate laws will be introduced to combat the use of cryptocurrency in criminal activities and contacts.
Earlier, the Indian government launched a series of repressions against the crypto exchange, during which both the exchanges and traders carefully studied the possibility of working with digital assets and making money on them in short terms. The legal authorities also sent a tax notice to more than 500,000 traders, in an attempt to collect huge taxes from their profits.
According to people familiar with the state of affairs in the government who wished to remain anonymous, the Income Tax Department recognized the importance of taxing virtual currencies.
Main statements of the offer are mentioned below:
Transactions outside the Indian territory will be subject to an integrated GST and will be considered as import or export of goods. IGST will be charged on cross-border supply.
Shubham Yadav, co-founder and head of the Coindelta cryptocurrency exchange, noted that the ban of the Central Bank will not stop the cryptocurrency trade. After this ban comes into force, most trades will be conducted in peer-to-peer networks or social applications with privacy policies, such as Telegram.
According to analysts, such a removal of cryptocurrency exchange from the official banking system will have the opposite effect, since it will completely withdraw virtual currencies from the control of regulatory authorities. This will greatly simplify the conduct of illegal transactions.
Lawyers recommend to wait a bit with investments and watch further developments.