The Indian Ministry of Corporate Affairs (MCA) regulates companies in India.
In a welcome move which begins to legalise cryptocurrencies in India, the MCA has issued notification that now mandates all companies which have invested, traded, dealt in any cryptocurrency during the reported financial year to disclose details.
Such disclosures will be required from the next financial year i.e. from April 1, 2021 onwards.
Technically, any company which has invested or traded in cryptocurrency, virtual currency during a financial year are now required to disclose profit or loss on transactions involving the same.
Further, the amount of currency of cryptocurrency or virtual currency held at the reporting date has to be reported.
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In addition, deposits or advances from any person for the purpose of investing or trading in cryptocurrency or virtual currency have to be reported.
In other words, with this rule the Indian government is recognising the cryptocurrencies as a store of value just like its national fiat currency of Rupee.
(Explainer: A fiat currency is one whose supply is arbitrarily maintained e.g. by printing more currency notes or extinguishing currency and it not backed by a store of value e.g. physical reserves of gold.)
Indian companies dealing in cryptocurrencies are welcoming these new regulations, echoing the above-detailed rationale.
Monark Modi, founder and CEO of Indian cryptocurrency exchange Bitex informed Business Today that this action is a “definite endorsement” and lauded that India is “not falling behind the global cryptocurrency race.”
Also, the Indian government is working on further laws to govern cryptocurrencies.