Govt seeks disclosure of crypto transactions, holdings

Govt seeks disclosure of crypto transactions, holdings

In a first, the ministry of corporate affairs (MCA) has asked all companies in the country to mandatorily disclose any dealings in cryptocurrency or virtual currency in their balance sheets. This is a major step towards regulating crypto assets in India and is expected to bring in a lot of transparency in reporting or filing of crypto investments.

The companies have to disclose profit or loss on transactions involving cryptocurrency or virtual currency, the amount of holding, and details of deposits or advances from any person for the purpose of trading or investing in cryptocurrency or virtual currency, according to the latest amendments to the Schedule III of the Companies Act, 2013. This will be applicable from the upcoming financia lyear, MCA said in a notification on Wednesday.

“From regulation to a complete ban, there are many competing theories as to what the actual legislation will be. Keeping that narrative in mind, the fact that the government has asked for disclosures, it may look to perhaps regulate rather than ban cryptocurrencies. But these are still early days and the most important piece of regulation is still to come," said G.V. Anand Bhushan, partner, Shardul Amarchand Mangaldas.

There are estimated to be around 10 million individual crypto investors in India, but the number of companies having exposure to this avenue is not known.

“The government’s move is expected to boost institutional adoption of crypto assets. We are eagerly waiting for positive regulatory guidelines from the finance ministry and the Reserve Bank of India for more clarity on crypto regulation in India. Indians have already invested around $1.5 billion in crypto assets, which clearly shows their intent towards embracing digital assets," said Shivam Thakral, chief executive officer, BuyUcoin, a cryptocurrency exchange.

Globally, major companies such as Tesla and MicroStrategy have been holding big amounts of bitcoin on their balance sheets.

Despite the MCA making it official for companies to hold and report crypto assets in their books, experts feel that there is still a disparity on how these assets will be taxed.

“Whether it is going to be taxed as business income, capital gains or speculative income, it is still to be tested. But it is certain that this information will be mined by the income tax authorities to verify whether people have paid taxes on this particular income or not," said Pallav Narang, partner at CNK RK & Co. Chartered Accountants. “The government’s intent seems to include and regulate cryptocurrencies," he added.

Meanwhile, the government is in the process of bringing in a bill on cryptocurrencies. The contents of the bill are not yet known, but the Centre has said in February that the bill would seek to ban all private cryptocurrencies such as bitcoin and ether. However, recently it had hinted that it would take a calibrated approach towards digital assets.

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India Mandates Public and Private Firms to Disclose Crypto Holdings

Indian companies have to disclose their cryptocurrency dealings from the next financial year, which will begin on April 1.

The country’s Ministry of Corporate Affairs amended Schedule III of the Companies Act, 2013 on Thursday to mandate both public and private companies to disclose their cryptocurrency holdings and other activities using digital currencies.

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According to the published gazette, the companies must disclose ‘profit or loss on transactions involving Cryptocurrency or Virtual Currency’, ‘amount of currency held as at the reporting date’, and ‘deposits or advances from any person for the purpose of trading or investing in cryptocurrency/ virtual currency’.

The companies have to report these crypto dealings in both their profit and loss statements and balance sheets.

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Though none of the Indian companies has revealed any cryptocurrency investments yet, many public companies in the United States and Europe have invested heavily in digital currencies, which might have prompted the Indian ministry to bring such reporting laws.

However, it will be interesting to see if the existing Indian cryptocurrency exchanges have made any digital currency investments. US-based Coinbase, which is heading towards a public listing, revealed that it added Bitcoin to its balance sheet in 2012.

Confusions Around Crypto

Last month, the Indian securities market regulator informally directed initial public offering (IPO) promoters to liquidate their cryptocurrency investments.

India’s new crypto disclosure rule came when the country is possibly heading towards a crypto ban. Though the government already drafted a bill and was about to debate it in the recent parliament session, it was not tabled while the session saw an early closure today.

Coinbase to Open India Branch Even as Potential Ban on Crypto Looms

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(Bloomberg) – Supply Lines is a daily newsletter that tracks trade and supply chains disrupted by the pandemic. Sign up here, and subscribe to our Covid-19 podcast for the latest news and analysis.A massive container ship blocking the Suez Canal showed no signs of budging for a third day, forcing container carriers and other vessels to weigh costly and time-consuming voyages around Africa that threaten to destabilize the already fragile underpinnings of global trade.Two liquefied natural gas tankers loaded in the U.S. and bound for Asian markets appear to have changed course in the mid-Atlantic and are now heading around Africa to avoid gridlock in the Suez waterway. A.P. Moller-Maersk A/S and Hapag-Lloyd AG are considering sending ships along the same route, moves that would follow a Synergy Marine-managed ship that is being sent around the Cape of Good Hope. Torm A/S, a Danish owner of tankers, said its customers have asked about the cost of options to divert.The possibility of alternate routes is the starkest example yet of how the canal blockage is starting to ripple across maritime transportation for everything from finished goods to energy and commodities. Even before the 400-meter long Ever Given got blocked on Tuesday, the pandemic sowed havoc in supply chains with shortages and delays.“Regarding the possible alternatives, we are looking at all of them, including the Cape of Good Hope but also many others, for example air solutions for critical and time-sensitive cargo,” Maersk said in a statement. “No concrete decision has been taken yet. It will depend on how long the Suez Canal remains impassable.”The logjam threatens to unleash more shipping turmoil that could mean higher costs for container carriers, the importers they cater to and maybe consumers eventually. A particular worry for the broader economic impact of the Suez incident are the supply lifelines for European companies ranging from car manufacturers to retailers that rely on a steady flow of Asian imports.“Even if the situation is resolved within the next 48 hours, port congestion and further delays to an already constrained supply chain is inevitable,” said Daniel Harlid, a Moody’s analyst. That’s bad because European manufacturers including automakers don’t stockpile parts, he said, adding that freight rates “will also most likely increase or at least stop decreasing from their currently very high levels,” he said.The German container line Hapag-Lloyd said it’s monitoring the situation “and closely follows the implications on its services. 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That may have a knock-on effect with people taking the view that they’ll take the longer transit for certainty.”Shipbrokers report that oil traders are increasingly hiring tankers with “just-in-case” options to sail around the Africa should the blockage drag on. Vessels sailing empty to collect oil in northwest Europe could get delayed, forcing the region’s exporters to seek alternative carriers, according to people involved in that market.Rates to charter oil tankers in some regions have climbed higher since the blockage first appeared. Suezmax vessels, which typically haul 1 million barrels through the canal are now fetching about $17,000 a day, the most since June 2020. If ships are forced to sail around the southern tip of Africa, that will boost rates as journey times increase.The canal is currently holding up about 2 million barrels a day of oil flows, according to Braemar estimates.The congestion is also hitting bulk carriers that ship products from wheat to iron ore. There’s a long queue of bulk ships at the moment – just shy of 40 vessels – according to Peter Sand, chief shipping analyst at trade group BIMCO.“Unless the situation is resolved very quickly we will soon see ships sailing south of Africa,” Sand said. “Oil tanker rates are terribly low at the moment so that’s where there’s most upside. Then some upside for dry bulk.”(Adds details on tanker diversions in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.