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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Indian Government Says Companies Must Disclose Crypto Holdings

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(Bloomberg) – Bitcoin fell amid a wider retreat in assets that had earlier ridden a wave of stimulus-infused optimism among retail traders.The largest cryptocurrency fell as much as 6.7% to $50,440, as of 11:55 a.m. in New York. The token, down for the fifth straight day, is mired in its longest losing streak since December. The wider Bloomberg Galaxy Crypto Index is also struggling.Speculation is growing that the latest stimulus checks in the U.S. will be spent in the real economy rather than markets as vaccinations help return life to something closer to normal. The number of call options traded in the U.S. has slipped from the records earlier this year and high-profile investments like GameStop Corp. and the ARK Innovation ETF are well off their highs.A general Bitcoin downtrend is being “exacerbated by the move to value in general across asset classes” and away from areas like technology, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. The upcoming expiry of derivative contracts is adding to the volatility, he said.The world’s largest digital asset on Thursday briefly fell below its average price over the past 50 days, which has been a key support level so far this year, according to Miller Tabak + Co.’s Matt Maley. A “lower-low below that level would scare a lot of momentum players,” said the firm’s chief market strategist.Bitcoin is about $10,000 below a record of $61,742 set earlier in March, but remains 700% higher over the past year. The coin spiked briefly on Wednesday after a series of tweets from Tesla’s Elon Musk announcing the automaker will accept the digital asset as payment. Still, it’s down roughly 12% since Friday.“Shorter-term, what happened yesterday, and following through today, means the start of a new series of lower highs and lower lows, and that’s categorized as a downtrend,” Julius de Kempenaer, senior analyst at StockCharts.com, said in a phone interview. “It means that we are now in a downtrend on the daily chart and it also means that the upside is now limited.”The token remains mainly a vehicle for speculation and is unlikely to displace alternative stores of value, according to Blythe Masters, a former JPMorgan Chase & Co. executive who is now chief executive of Motive Capital. The Bank of International Settlement’s Benoit Coeure said the coin’s volatility makes it impossible to act as a currency.Others argue institutional adoption of Bitcoin is expanding as part of efforts to diversify portfolios and hedge risks like faster inflation.“The color and information we see from the street is largely from the institutional part of the market, and nothing has really changed in their view on the impact of stimulus on longer term inflation and the role of digital assets as a hedge to that,” said Matt Long, head of distribution and prime brokerage at digital-asset platform OSL in Hong Kong.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.