India requires companies to disclose their cryptocurrency holdings and transactions in all their public filings of financial statements, according to the Ministry of Corporate Affairs of the Government of India. The new disclosure requirement will come into effect from April 1, 2021, the beginning of the new financial year.
As per the amendments made to the Schedule III of the Companies Act, 2013, all companies operating in India are required to provide details of cryptocurrency or virtual currency holdings. It should include where the company traded or invested in cryptocurrency or virtual currency during the financial year.
The details should also include the amount of cryptocurrency held as at the reporting date, profit or loss on transactions involving cryptocurrency or virtual currency and the deposits or advances from any person for the purpose of trading or investing in cryptocurrencies.
This amendment to the Companies Act by the Indian Government comes amidst the impending ban on the operation of private cryptocurrencies in the country.
In India, the regulators and governments have been skeptical and are apprehensive about the risks associated with the ever popular private digital currencies, virtual currencies and cryptocurrencies. However, they are game to using blockchain technology, the underlying technology for cryptocurrencies such as Bitcoin.
Investors, crypto-exchanges and other entities had began dealing in the digital asset after India’s Supreme Court in early March 2019 struck down the Reserve Bank of India’s curbs on financial institutions under its preview to deal with cryptocurrencies. The RBI had imposed the ban in April, 2018, but it was effective from July 2018.
In early February, the Government of India was in the process of taking the ordinance route to quickly impose a ban on the operation of private cryptocurrencies such as Bitcoin in the country. The cabinet has cleared the proposal to introduce the “Cryptocurrency and Regulation of Official Digital Currency Bill” via the ordinance route.
The government is fast tracking the bill and is looking to introduce the law within a month of passing the ordinance. The bill seeks to ban private cryptocurrencies while creating a framework for the official digital currency to be issued by Indian central bank, the RBI.
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