The Confederation of Indian Industries (CII), a group,which believes that cryptocurrency should be regulated rather than banned has also proposed that crypto be treated as a separate class of securities with new set of legislation.
According to Business Line, the trade association produced a paper titled “Cryptocurrencies, Crypto Tokens/Assets, and Regulations: The Way Forward,” in which it recommends for regulating the crypto sector rather than prohibiting it.
The paper emphasized the significant technological innovation that blockchain’s core technology can offer to the payment and remittance sector. Instead of regulating the embryonic crypto market under existing securities law, the paper proposes creating new laws.
“A new set of legislation tailored to the context of crypto/digital currencies and their decentralized, jurisdiction-free nature should be developed and implemented.”
This would mean that regulatory attention would be focused on dealings and custody rather than issuance (unless if issuance involves a public Initial Coin Offering (ICO) by an issuer based in India),” according to the official report.
The CII research proposals
The CII research proposed that cryptocurrencies be included in an unique provision of income tax and GST regulations that allows them to be considered as an asset class for tax purposes unless a participant specifically treats them as “stock in trade.“
To safeguard investor protection, the research advocated enforcing strong Know Your Customer and Anti-Money Laundering standards for centralized exchanges. Furthermore, to receive a financial markets intermediaries license, these exchanges must register with the Securities and Exchange Board of India (SEBI).
It also suggested that exchanges adopt a minimum capital and guarantee fund requirement while still adhering to investor disclosure standards.
The CII research comes at a critical time, as parliament is now debating a draft of a cryptocurrency bill. The Indian finance minister previously stated that the government will not outlaw cryptocurrencies, but rather regulate them as an asset.