According to local reports, the Indian government might soon classify cryptocurrencies as commodities.
A new draft bill classified the asset class as commodities, although the full scope of the move is still unclear. If true, cryptocurrencies could be subject to the same as commodities, including taxation and an analysis of how they are used.
The decision to classify crypto as commodities and not a currency could solve several challenges that the Indian government has with the market.
So far, India does not consider bitcoin as legal tender and strongly believes that only the central bank should issue currencies.
A major talking point in the draft shows that authorities will focus on the end-use of digital assets, which implies that the technology used by each individual blockchain or cryptocurrency will define their classification. The definition and classification of crypto will be a vital part of the draft and will at least enlighten investors on “what” a cryptocurrency is.
Additionally, new Know your customer (KYC) procedures and accounting standards will be put in place.
India’s stance on cryptocurrencies has been laced with a lot of uncertainty. Some Indian entrepreneurs and financial institutions had previously called for a total ban of cryptocurrencies in the region.