Government officials have issued a mandate that makes it compulsory for all companies to disclose details of their financial transactions that were made through crypto or virtual currencies. The complete details should be mentioned via the financial statements for 2021-2022. The reason for the same has been said to be transparency, which is just the first layer, according to legal experts.
Currently, it is being understood that the directive is not completely in conflict with the Centre’s recent ban on crypto trading within the country. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to build a framework for an official digital currency for the country, ban a majority of the private cryptocurrencies, while also supporting the growth of blockchain technology. On the heels of the final decision of the legal status of crypto in India, the directive will be suitably amended for the future.
As of now, cryptocurrencies have been deemed to be unregulated, and not banned. In lieu with promoting transparency and compliance within the crypto space, the new directive has been put in place. It will also look into matters like tax evasion and the extent of crypto use in corporate transactions.
Interestingly, the directive has not discussed retail trading, which, today, happens to be one of the biggest aspects of the crypto market.
Experts believe that this new directive makes it clear that the Centre intends to gather as much data on crypto trading and digital currencies in order to understand the extent to which it has penetrated the Indian market.
Additionally, the information gathered in these financial statements will also be helpful in determining aspects of FEMA and taxation when it comes to trading in crypto.