India’s need for proper regulation of NFT’s & Crypto Market

India’s Requirement for Proper Regulation of NFT’s & Crypto Market

• The world is moving away from traditional currencies and toward electronic versions, particularly virtual currency.
• Non-fungible tokens, often known as NFTs, are a modern technology-based token that are prominent in today’s markets.
• NFTs are digital assets with a distinct identity that are interchangeable with other digital assets but cannot be replaced.
• Non-fungibility prohibits copying and manipulation of non-fungible tokens. Crypto and non-fungible tokens are regulated by the same regulations as they both use blockchain technology.
• Cryptocurrencies can be traded for one another, while non-fungible tokens cannot. The development of cryptocurrencies on a global scale has certainly attracted Indian traders’ and investors’ attention.

Important of cryptocurrencies in Indian Situation

• The first transaction in the United States of America took place 9 years ago whenever anyone spent 10,000 Bitcoin on two pizzas. According to a survey by Broker Chooser, India now has the highest percentage of cryptocurrency owners in the world, despite uncertainty regarding the existence of cryptocurrency legislation.
• According to another source, there are currently about 2 crores of investors using Indian cryptocurrency exchanges.
• India was rated second globally in terms of total cryptocurrency searches, which shows the new interest.

Future of Crypto in India

• The Reserve Bank of India issued a circular in 2018 directing all enterprises under its regulation to refrain from dealing with or offering services related to virtual currencies. However, the Supreme Court reversed the Reserve Bank of India’s ban in March 2020, ruling that it was “disproportionate.”
• But, it implies the need for regulation to cope with such virtual currencies, not that the Supreme Court has legalised cryptocurrencies.

Regulation of NFT’s & Cryptocurrencies in India

• As far as we know, there’s really currently no regulation or legislation governing or regulating cryptocurrencies in India. Making laws and rules for cryptocurrency is currently being worked on in India.
• In the past, the government had intended to explicitly prohibit private cryptocurrency while facilitating the development of an official digital currency. Given how important it is to Indian investors,
• The government is taking its proper time so that the legislation it will impose would be in accordance with the international regulatory regime.

Regulate Crypto & NFT’s Challenges in India

• The structure of the proposed bill and the basis of the definitions will decide the future of non-fungible tokens and cryptocurrency.
• Due to the fact that non-fungible tokens and cryptocurrencies both use the same technology, namely blockchain, the future bill may have an influence on both. The classification of non-fungible tokens will determine how they are treated under Indian law.
• NFTs are traded on the Distributor Ledger Technology (DLT) network on a worldwide scale, although trading non-fungible tokens in India will need to be legalised.
• The FEMA law, the Information Technology Act, the Intellectual Property Act the treatment under the Income Tax Act, and the SEBI laws for trading of these Tokens or digital currencies would all be impacted by non-fungible tokens and cryptocurrency.

Taxation on income arising on transfer of virtual digital assets

Tax dept is issuing an alert on crypto transactions which are high value.

• Tax dept is issuing an alerts on crypto transactions which are high value. The said crypto transactions matter came to light earlier this week when There has been a rise in tax dept related queries which tied to high value crypto transactions.
• Basically Indian Govt is maintaining a strict oversight on all income tax work related to high value crypto transactions in India.
• Given the confusion around income tax filing cryptocurrency taxes, only about 7% crypto holders in India paid their taxes earlier year.
• 30 percentage income tax is levied on cryptocurrency earning & 1 percentage Tax deducted at sources is deducted on cryptocurrency transaction – basic objective to track defaulters & identify the suspicious cryptocurrency holders. And take the appropriate action on them.

Summary

• As the non-fungible token and cryptocurrency markets expand globally, Indians are becoming involved and showing interest in making investments or developing their own non-fungible tokens.
• It shows the need for rules. Non-fungible token regulations and legalisation of cryptocurrencies would assist India in creating an open system while also considering national interests.
• Positively, it appears that the coexistence of conventional and new digital currencies will be preferred in the near future rather than the choice of a single currency, making the legislative framework supporting such a parallel approach more practical and advantageous.
• This could aid India in addressing these issues as well as seizing the chance they present.

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