Bitcoin trade may come under SEBI
What is in news?
The government is considering the introduction of a regulatory regime for virtual or crypto currencies, such as Bitcoin, that would enable the levy of the Goods and Services Tax on their sale.
The new regime may possibly bring their trading under the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI).
Present status of Crypto currencies:
There are multiple such currencies — bitcoin, ethereum, ripple are some of the popular ones.
Currently, they are neither illegal nor legal in India.
“One bitcoin today is worth as much as 60 grams of gold.
The market cap for all crypto-currencies has just crossed $100 billion, with most of the increase coming in the past few months. On April 1, 2017, the total market cap was just over $25 billion, representing a 300% rise in just over 60 days.
The idea is to treat such currency in a manner similar to gold sold digitally, so that it can be traded on registered exchanges in a bid to “promote” a formal tax base, while keeping a tab on their use for illegal activities such as money laundering, terror funding and drug trafficking.
Crypto-currency that is planned to be brought under the regulatory regime is a digital currency which allows transacting parties to remain anonymous while confirming that the transaction is a valid one. It is not owned or controlled by any institution – governments or private.
Bitcoins were in the news recently when during the two global cyber ransomware attacks — WannaCry and Petya — attackers sought about $300 in bitcoin as ransom. Crypto-currency can also be used for a lot of legal activities — such as booking tickets, buying coffee or fast food, depending of which retailers accept such currency.
Why bitcoins are a bit risky?
“Banning will give a clear message that all related activities are illegal and will disincetivise those interested in taking speculative risks, but it was pointed out it will impede tax collection on gains made in such activities and that regulating the currency instead would signal a boost to blockchain technology, encourage the development of a supervision ecosystem (that tracks legal activities and may also assist in tracking illegal activities) and promote a formal tax base
Blockchain is basically a digital public ledger that records every transaction. However, the involved parties can remain anonymous and they transact under an id. Bitcoin is just one of the applications for the technology, whose use in being tested across industries, particularly those that rely on intermediaries such as land record registry.
It was also suggested that government maintain limited regulation. “This means reiterating that crypto currencies are not recognised and those who deal in them do so at there own risk, while focusing on curbing illegal activities… Blockchain technology can be separately encouraged.”
If a decision is taken to regulate such currency, these would be treated as “digital asset, similar to gold,” which means that crypto currency owners will be able to trade them on registered exchanges.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies.
Bitcoin became the first decentralized cryptocurrency in 2009.Since then, numerous cryptocurrencies have been created
These are frequently called altcoins, as a blend of bitcoin alternative
Bitcoin and its derivatives use decentralized controlas opposed to centralized electronic money/centralized banking systems.
The decentralized control is related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger
The Securities and Exchange Board of India is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992.
Agency executive: Ajay Tyagi (Chairman)
Type: Statutory corporation