Transactions involving cryptocurrency have now been mandated by the Corporate Affair Ministry. Firms banking on cryptocurrency have to disclose the profit or loss on transactions involving any sort of virtual currency. Besides, making changes to Schedule III of the Companies Act, 2013, there are increased disclosure requirements, including details about their dealings in cryptocurrencies, if any. The changes mentioned in the notification will come into effect from April 1. The decision comes amid government proposals to regulate cryptocurrency in India or impose a ban on certain transactions.
MCA’s strategic move
Firms that seek cryptocurrency as an investment are now ordered to disclose in their annual financial statements the amount of cryptocurrency held as on reporting date. This move from MCA came in coalition with Centre and RBI consultation to form up a framework for regulating cryptocurrencies and looking at even introducing a sovereign digital currency while banning private cryptos. A government-appointed panel, headed by SC Garg, former Finance Secretary, had recommended banning cryptocurrency while allowing a sovereign digital currency.
India Voices its opinions on cryptocurrency
Ashok Hadia, the former Secretary of the CA Institute highlighted the existence of cryptocurrency in India. “Specific disclosure as now required is thus welcome from the perspective of investors, regulators, and other stakeholders. This will also help regulators and authorities in tracking sources of funds used in trading or investing in cryptocurrency,” he said. He further threw light on the importance of cryptocurrency data exposed for security and accounting purposes. Srinath Sridharan, an independent markets commentator terms this step as a good move to collate information on the investments of Indian companies in cryptocurrency.
TPT Policy Advocacy & Recommendations
- Governments should explore the potential benefits of the technology behind cryptocurrencies and delineate its effects on the Indian economy.
- A possible area of immediate benefit from cryptocurrency technology is B2B transfers. Central banks should consider how this technology can benefit funds transfers between banks and companies without the complication that comes with using the technology among consumers at large. An approach to mitigate the potential risks of issuing a national cryptocurrency should also be considered.