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Crypto tokens should be designated as a special class of securities, placed under Sebi: Cii


The government is set to present the Cryptocurrency and Official Digital Currency Regulation Bill, 2021 to the Winter Session of Parliament for consideration and passage. The bill aims to ban all private cryptocurrencies in India and will create a framework for the official digital currency to be issued by the Reserve Bank of India.

So, as there will be regulations, the Confederation of Indian Industry (CII) made a representation to the government and to the standing committee. When asked what they had on offer Rajendra Chitale, a member of the CII National Committee on Financial Markets, said there was no reason for cryptos to be treated as a medium of exchange.

“ICN recommended that it

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“Whereas Know Your Customer (KYC) and Anti Money Laundering (AML) regulations should apply. You must apply the regulations relating to transactions and custody. to scholarships. We need to have a framework to ensure that they comply when registering clients or clients – all the standards that intermediaries in the financial services industry apply when registering clients. Thus, KYC and AML are not negotiable, ”he said, adding that they also suggested that decentralized exchanges could be made to provide information to tax authorities regarding transactions made by participants in the. -beyond a certain threshold.

We have also suggested that for tax purposes, unless and until a particular participant treats it as a stock market share, it should be treated as capital property. Also, the way the tax treatment should work is that there has to be a burden like in infrastructure laws in the United States. Additionally, they have made a specific provision for reporting crypto holdings and crypto transactions in U.S. income tax returns. They also imposed tax reporting obligations on intermediaries. So, a similar framework can be applied to India and it could actually be a great source of government revenue in the long run, Chitale explained.

When asked who regulates and what exactly needs to be regulated, Chitale said it makes perfect sense for this to become special security and be submitted to the Indian Trade and Security Council (SEBI ) because we have a whole regulatory framework, which with modifications could be applied to custody matters, transaction matters and disclosure matters and SEBI’s experience and expertise here would be helpful.

“The opening paragraph of our recommendation suggests that it is in fact improper to call this asset class as cryptocurrency, it is in fact a digital token that we are talking about and once you treat them as a special class of securities, we would be in a position to ensure that the FCRA as a body of law – with the appropriate modifications – can be easily enforced. A large number of SEBI regulations can be modified and enforced appropriately. Central in my opinion for regulation is custody and use and a large majority of the regulation would give SEBI a head start to be the regulator of this asset class, ”said Chitale.

To learn more, watch the video.

(Edited by : Jerome Antoine)

First publication: STI


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