While there is no way of knowing when the crypto law in India will be passed in Parliament and what form the regulation will take, what we can do is look at how other countries treat cryptocurrencies and see how India has compared so far.
Different countries and groupings have their own ways of regulating CRYPTOCURRENCY, but it's safe to say that India has so far been among the most closed to cryptocurrencies. Following media reports on what the Government is likely to propose in crypto legislation, it appears that this status is not likely to change substantially. But let's take a look at crypto regulations in major economies and groupings and see how India really compares:
United Kingdom
As with most countries as of now, the UK does not have comprehensive legislation on the regulation of cryptocurrencies. Under the current system, the Financial Conduct Authority is the body that licenses licensed cryptocurrency-related companies, which also include cryptocurrency exchanges. These companies, like all others seeking an FCA license, must adhere to a strict set of rules. These rules are particularly strict for those companies that operate in cryptocurrency options and futures trading.
In terms of taxation, the United Kingdom taxes the earnings of cryptocurrency trading as you would benefit from any other forex trading. Businesses involved in currency trading, or the cryptocurrency exchanges themselves, are governed by corporate tax rules.
This is not to say that the FCA is blind to the potential risks of cryptocurrencies. Like the RBI, it has regularly issued warnings to investors in the UK that they should invest with caution.
USA
Like India, the United States has a dual legislative system in which the central government and state governments have powers to legislate. Regulations regarding cryptocurrencies vary between states in the US, but overall, the country has been in favor of allowing all cryptocurrency activities.
New York, in particular, is a prominent example of a favorable legislative environment. In 2016, New York launched a licensing framework for cryptocurrency businesses and exchanges, called the BitLicense. Under the system, businesses looking to transmit, hold, buy, or sell cryptocurrencies must obtain a license from the New York State Department of Financial Services.
Another state in the US with a favorable regulatory environment for cryptocurrencies is Wyoming, which, in 2018, exempted cryptocurrency developers or sellers from securities laws as long as they met certain conditions.
European Union
Legislation in the European Union is a complicated matter, with some issues being dealt with by member countries and others being dealt with at the consolidated Union level. Until now, cryptocurrencies have been regulated by every EU country, with most opting for a soft regulatory framework. Recently, however, the EU has considered the possibility of establishing a consolidated framework on cryptocurrencies. In September 2020, the European Commission published a bill titled Regulation of Crypto Asset Markets (MiCA).
According to the draft, cryptocurrencies will be treated as regulated financial instruments. Like other similar financial instruments, any company that owns, trades, offers brokerage services, or provides investment advice regarding cryptocurrencies will need prior approval from regulators.
What is particularly interesting about the draft is that it takes into account the different types of crypto-tokens, such as crypto-assets, utility tokens, asset-referenced tokens, and electronic money tokens, and proposes different rules for each.
porcelain
China's deal with cryptocurrencies has been a roller coaster ride. Where at first it welcomed all activities related to cryptocurrencies, especially mining, it has now become one of the most restricted crypto markets in the world. As recently as September 2019, China accounted for around 75% of all crypto mining in the world. However, in June 2021, it banned the mining of cryptocurrencies, causing a drop of around 40% in global mining operations, according to some reports.
Previously, China had banned initial coin offerings (ICOs) in 2017, after which it also ordered the shutdown of crypto exchanges. However, the main reason for complaint from lawmakers was with ICOs, so it has not made it illegal to hold or trade cryptocurrencies. Like India, the Chinese government has also shown considerable enthusiasm regarding blockchain technology and has encouraged the growth of blockchain-related startups.
China is also among the most advanced in terms of taking out an official fiat cryptocurrency, in the form of the digital Yuan. It has already begun real-world testing of the cryptocurrency, which will be centrally regulated, but is supposed to operate differently than normal fiat currency.
conclusion
As discussed in the previous article, India has taken a very conservative approach towards CRYPTOCURRENCY, with the RBI trying to ban them. Although the ban was lifted, the declared attitude of the central bank has not changed. As for the government of India, it is following the dual path of seeking to strictly control or even ban cryptocurrencies, while also encouraging the use of blockchain technologies.
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