Months after India’s Supreme Court lifted a 2-year-old directive against cryptocurrency usage in the country, the Reserve Bank of India (RBI) is still not cooperating with digital asset businesses. Several exchanges have requested clarifications from the bank regarding their status as the scrutiny from lenders continues.
Crypto Exchanges Contact RBI
A local report from today indicated that digital asset exchanges are still unclear regarding their stance. Therefore, many platforms have written to the RBI seeking clarification on their status. Lenders keep denying them banking services claiming that the regulator, the RBI, has not provided the necessary instructions.
Cryptocurrency exchanges have also requested detailed information on their legal categorization. Establishing if they function as a commodity, currency, goods, or service will ultimately decide how they are taxed under the Good and Services Tax (GST).
“If digital assets are not exempted from GST, the digital currency exchanges in India are going to have a standoff with the tax authority. In early 2019, the tax department had reached out to several cryptocurrency platforms in this regard.
In the wake of the recent Supreme Court ruling, we have also approached the RBI for clarity on this, as if we pay GST on the whole transaction, then most platforms would not be able to survive.” – said Praveenkumar Vijayakumar, chairman, and CEO of a local cryptocurrency platform Belfrics Global.
Indian authorities have investigated digital asset platforms and investors in the past to determine if they fall under the GST. Until this day, however, it’s still unclear the exact method of taxation for cryptocurrency-related operations.
India’s Legal History Regarding Crypto
Two years ago, the Reserve Bank of India (RBI) issued a directive that practically banned cryptocurrency usage and operations in the country. All financial entities regulated by the bank had to seize working with individuals or businesses engaged with digital assets.
In March this year, though, the nation’s Supreme Court quashed the directive and even referred to it as “unconstitutional.” The RBI, however, quickly decided to file a review petition against the decision. Today’s report supports the claim that the bank still has issues with anything related to digital assets.
It’s worth noting that following the ban removal, some of the world’s leading cryptocurrency exchanges began investing in the large Indian market. Kraken, a veteran U.S.-based platform, announced plans to relocate resources in the region. Shortly after, Binance, and a local exchange WazirX, launched a “Blockchain for India” fund to invest in blockchain startups.