Regulating bitcoins in India

Why in News?

The government is considering the introduction of a regulatory regime for virtual currencies such as Bitcoins.

What is a bitcoin?

• Bitcoin is a type of crypto-currency.
• Crypto-currency is a digital currency that allows transacting parties to remain anonymous while confirming the transaction is valid.
• It is not owned or controlled by any institutions – government or private.
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What is the curent status of bitcoins in India?

• Bitcoins are classified only as movable property and more specifically as computer software.
• The government has not formally brought bitcoins under the defintions of currency or prepaid payment instruments.
• Neither did it make bitcoins illegal.
• It is thus right to say that currently the crypto-currency is neither illegal nor legal in India.
• The pros and cons of legalising them is currently debated among the government circles.

What are the benefits of legalising bitcoins?

• Trading of bitcoins would be brought under the stock market regulator, Securities and Exchange Board of India (SEBI).
• Bitcoins can be traded on registered exchanges which will promote a formal tax base. Returns from investment in Bitcoins would be taxed.
• Use of bitcoins for illegal activities such as money laundering, terror funding and drug trafficking can be checked.
• If any foreign payment is made through Bitcoins, it would fall under the purview of Foreign Exchange Management Act,

Source: The Hindu