Bitcoin’s Bull Run under the Scanner
The buzz around Bitcoins has been growing louder in the country, and now for the wrong reasons. On December 13, the income tax department conducted surveys at nine major Bitcoin exchanges across the country, including Delhi, Bengaluru, Hyderabad, Kochi and Gurugram, on suspicion of alleged tax evasion. Reports say that the I-T department is set to issue notices to 400,000-500,000 high net worth individuals, who have been trading on the exchanges of this unregulated virtual currency.
Despite the crackdowns against this cryptocurrency, Bitcoin trade has been surging in India. Industry sources estimate that there are eight million Indians who trade
in this digital currency, which works without a central bank or a single administrator. The value of Bitcoins has spiked 2,000 per cent since January this year, and as on December 16, Bitcoins were trading at around $19,500 (approx. Rs 12.5 lakh) apiece, making it one of the costliest currencies in the virtual world. Reports suggest that financial sector watchdogs, including the Reserve Bank of India and the Securities and Exchange Board of India, will soon prepare a framework to safeguard gullible investors and to clamp down on the fraudsters who may try to manipulate the regulatory gaps.
Sources say that although Bitcoins are not accepted as legal, they are not declared as illegal and there are no means to act against those who deal with them. On the contrary, some say Bitcoins are the future of currency, given that it is digital, unifying and free of regulators.
“Income tax surveys are good for Bitcoin exchanges, and the government should start recognising this business,” says Subharansh Rai, co-founder and COO of EthxPay, a Delhi-based Bitcoin exchange. Investors can open an account on Bitcoin exchanges after submitting key identification details such as Aadhaar and PAN card, and use their bank accounts to buy Bitcoins or open a personal wallet. Transactions are made from this wallet to other digital wallets using a private key.
“If it is illegal, the government has all the authority to ban this trade. But why isn’t it doing so?” asks Rai.
The reason, say experts, could be that the government may look at Bitcoins as a taxable commodity in the future. Moreover, it is getting recognition from large exchanges worldwide, including Nasdaq. In March 2017, the finance ministry constituted an interdisciplinary committee to take stock of the status of virtual currencies in India and globally, and suggest measures for dealing with them. The committee has submitted its report, which is reportedly being examined by the ministry. Given the risk and the volatility involved in Bitcoin trade (it can rise in value and plunge equally in a matter of hours), it is quite likely that Bitcoins will remain under the government scanner for some time to come.
—M.G. Arun