India’s crypto law will regulate cryptocurrencies as assets but their use as currencies for payments might be barred, the Economic Times has reported. Active solicitation by crypto exchanges is also likely to be banned. The draft bill could be taken to the Union Cabinet for consideration within the next two to three weeks, a government source told ET. Under the bill, the Securities and Exchange Board of India (SEBI) might be appointed to regulate cryptocurrencies the source added. Many major cryptocurrencies derive their value from their potential to be used for transactions on decentralized networks, if not for regular payments. A blanket ban on all crypto-based transactions might raise questions about the utility of cryptocurrencies in India.
A question for our readers: If the usage of crypto is limited to disallow the usage for payments (for example, for NFTs), would you still invest in Crypto? Leave a comment.
Are cryptocurrencies being used for payments in India?
While cryptocurrencies certainly haven’t been widely adopted for payments in India, a few pioneering platforms and brands have recently started using them:
- FASTag recharge: Crypto exchange Unocoin is allowing its users to recharge FASTag wallets using bitcoin, the company announced in September. FASTag is the electronic toll collection system operated by the National Highway Authority of India.
- Nykaa, Tanishq, Cafe Coffee Day: Crypto platform Bitrefill allows users to buy gift cards for famous Indian brands including Nykaa, Tanishq and Cafe Coffee Day using cryptocurrencies like Bitcoin, Degecoin, Ethereum among others, NDTV reported.
- Home Decor, Eateries: Delhi-based decor brand The Rug Republic has started accepting Bitcoin and 20 other crypto coins as payment, NDTV reported in August this year. A restaurant in Bengaluru started accepting payment in Bitcoin, the report added.
What else do we know about the crypto bill?
- A balanced approach: “A middle path that balances the concerns of all stakeholders is more likely,” a government source told ET on the possibility of the Indian government banning cryptocurrencies. Considering that Indians have made large investments in crypto assets, an outright ban is unfeasible, the source added.
- 1% GST for exchanges: The crypto legislation will classify cryptocurrency exchanges as e-commerce platforms and levy 1% GST collected at source, CNBCTV18 has reported.
- Broad regulation: The crypto bill is planned as a broad regulation to give cryptocurrencies legal credence in India, ET reported. The bill will not go into sub-categorizing the different types of crypto assets, the report said.
- Timeline: While the bill might be presented to the cabinet in two to three weeks, the draft will be presented in Parliament in the Budget session, according to an ET report.
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