Can India live without crypto ?
So this topic came to my attention in Twitter - Nischal Shetty from WazirX, a leading exchange in India ( now bought by Binance) was asking this question and was seeking some views and pointers that he could use while speaking on the topic.
And my response was why India live without crypto ? Here is the twitter link of my response :
https://twitter.com/sanjeevmbbsr/status/1364507355077959683
- sanjeevmbbsr
Having been a honest tax payer, I don't find a valid reason for Why India live without crypto ? Everything is paper clear when it comes to regulation - so why don't we encourage crypto and underneath technology ? Every exchange has got all the details of every person, registering on various exchanges. So the moment one liquidates crypto currencies to fiat (INR), the exchange has all the transaction details. And they do have the PAN ( Permanent Account Number) of every registered individual. So the government can insist they inform all the transactions to the Income Tax department and that should just be fine.
Being a democratic country, Why crypto currencies banned without a valid legal reason ? When it comes to individual, we will have to certainly pay tax for any profit and we have greater responsibilities - to calculate the profit and pay the tax - the challenge there would be to justify the profit amount. The exchanges can give information about the withdrawals , but what about the investment !! So its more on the individual - to keep track of his investments - then withdrawals - calculating the profit there by and then paying the tax - again he has to find the right tax rate that is applicable. And while doing all these, he has to make sure, he has books of records, to be able to justify them, when the tax authorities insist.
And if the person is having income from other sources like Salary - then its more challenging, because, you will have to show different in returns as compared to what is represented by the Employer. And then you will have to wait for returns. Sounds complex and additional headache, right ? Yes, that is what an individual has to go and the government gets the tax without doing much. And more ever they have authority to ask any time!! Given that now a days, everything is digital, it will be very difficult to hide things and any honest tax payer would not do it.
And if we talk about people using it for illegal purpose, then they will definitely not love to get caught because the moment they liquidate, the exchange has all the details. And if its big amount, I am sure, it's monitored by their bank as well.
Unfortunately there is lack of support from big investors. Couple of days back Rakesh Jhunjhunwala, leading investor said in his interview to CNBC that he won't buy Bitcoin for 5 $ - And the reason - He thinks, it's only the sovereign who has the right to create currency. And he questioned about the fluctuation / volatility of BTC - SOMETHING that fluctuates 5 - 10 % in day is a currency ? He thinks, its more of speculation of highest order. You can watch the video. But stocks also fluctuates sometimes more than this, isn't it ? The only difference is in the number of times but that depends on market sentiment.
However, all these are not valid causes of banning it. The government is pushing for a digital currency of its own - but forcing to use that only and banning others is definitely not the right spirit of democracy. Rather the government should ask the policy makers to come up with proper taxation rules with clear policy and then let the citizens decide.
What do you say ?