As regulators in India mull over a new Bitcoin ban, the country’s first crypto exchange, BuyUcoin, and industry leaders have come together to propose an alternative.
Indian Government Balances Bitcoin Ban
Founded in 2016, one of India’s first crypto exchanges, BuyUcoin, quickly became a multi-million dollar platform. Though volumes evaporated following the banking ban in 2018, the Supreme Court’s recent ruling to overturn the ban has revived the exchange.
But all is not great in the Indian crypto sphere, and there are talks again of a looming blanket ban in government circles. This time, though, BuyUCoin wants to have a voice in these talks.
In collaboration with industry stakeholders, thought leaders, entrepreneurs, developers, and regulators, BuyUcoin introduced an open initiative that seeks to form a regulatory sandbox– a well-defined framework to regulate cryptocurrencies in the country.
The draft document titled “Regulatory Sandbox: The Key To Cryptocurrency Mass Adoption In India” establishes clear ground rules for the crypto industry, which could legitimize the industry and bring it under the general financial regulatory umbrella.
“What we are doing with this sandbox is putting out some self-evaluation protocols which everyone can adopt. Not just the asset marketplaces but also companies [that] enter the industry but are afraid of certain things that could backfire,” said CEO and co-founder of BuyUcoin, Shivam Thakral, in a video post.
The recent draft document recommends that traders and investors declare their yearly crypto income under a separate provision than the Income Tax Act.
Preventing Illicit Activity in India
BuyUcoin also introduced a whitepaper that prescribes open-source APIs to track crypto transactions and maintain a technical framework for AML and KYC compliance.
The draft proposes a platform which would merge data from exchanges and channel it directly to regulators. These recommendations target the Indian government and the central bank’s anxieties about cryptocurrencies being utilized for terror financing and money laundering.
For years, the central bank has cautioned the government against legalizing crypto assets and was behind the nationwide wide ban on fiat-to-crypto banking transactions.
Such regulations are needed to prevent illicit activity and help companies who want to work in the crypto space without the complex legal overhead.
“There are companies who want to enter into the industry via the launch of their utility tokens, which is one of the best use cases of crypto. But they are afraid that launching utility tokens could bring regulatory problems for them. In other nations, there are certain regulations which companies can follow for their work but they are not present in India, which is stifling business and innovative products,” said Thakral.
Countries like Singapore and the US have already established clear regulations for crypto assets regarding tax evasion and AML.
For example, the United States’ Financial Crimes Enforcement Network (FinCen) decided to put cryptocurrency exchanges under similar regulations that apply to traditional money transmitters. This includes the bank secrecy act, which prevents criminals from using financial institutions to hide or launder funds.
Following BuyUcoin’s proposal, India could soon join countries currently leading the industry.