The Ministry of Corporate Affairs has amended the Companies Act, 2013 mandating companies to disclose their crypto or virual currency holdings and transactions as part of their annual financial statements for this fiscal. While crypto-currencies are an unregulated industry in India, this move marks the first step towards the government recognising the digital assets as part of law. Companies that have traded or invested in crypto-currencies during the financial year will need to disclose their profits or losses from crypto-currency transactions, the amount of crypto-currencies held at the time of reporting their finances and the quantum of deposits or advances the company receives from any person for the purpose of trading or investing in crypto-currencies. This means that crypto-currency exchanges would need to disclose the total amount of funds their investors have parked with them over the last year. The amendment was made under Schedule III of the Companies Act, under the section mandating specific financial transaction disclosures as part of the Profit and Loss Statement. Companies that receive funds from persons or entities in order to directly or indirectly lend or invest the funds towards persons or entities on behalf of the funding party or companies that provide any guarantee, security or the like on behalf of the funding party are mandated to include these disclosures. In January, the government announced that it would introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will ban “private” crypto-currencies while at the same time providing the Reserve Bank…
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