In a significant move, the government has made it mandatory for all Indian firms, unlisted and private, to disclose their dealings in cryptocurrency or virtual currency. According to experts, the move is expected to boost the institutional adoption of crypto assets and take the industry to the next phase of growth.
Companies such as crypto exchanges earn in cryptocurrency itself, hold and invest part of their profits in cryptocurrencies.
While the new rule deals with the companies’ own holdings, there is uncertainty over whether crypto exchanges will have to share details of holdings of their customers as well.
“We are not sure, but even if that is there, it will be good for the sector. You need to be as transparent as possible as an industry,” said Nischal Shetty, chief executive, WazirX.
As per the notification issued by the ministry of corporate affairs (MCA) on Wednesday, companies have to disclose profit or loss on transactions involving cryptocurrency, amount of holdings and details of deposits or advances from any person for trading or investing in cryptocurrency.
However, according to Ashish Singhal, CEO and co-founder, CoinSwitch Kuber, the rule will not make it mandatory for exchanges to share customer data with government. “Wallets or companies like us don’t put account users’ balances on our books. So that is not our money,” he said.
But Singhal says it would be a good step if user data is shared with the authorities. “Stock investment platforms report to authorities stock brokerage dealings within a quarter against a PAN. That’s how the framework works everywhere. Globally, whatever cryptocurrency investors hold, it is getting reported to tax authorities against their identification,” said Singhal. “However, that is not the framework in India today.”