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India has put forth a new crypto disclosure requirement for companies dealing in cryptocurrencies. Starting next month, these firms will need to disclose their crypto holdings as part of their financial statements.
In a notification issued last week by the Indian Ministry of Corporate Affairs (MCA), companies will be required to disclose their cryptocurrency holdings and other crypto-related matters in their financial statements, according to Business Insider. The crypto disclosure requirement will start on April 1, which is also the start of the country’s financial year 2021-22.
The requirement of crypto disclosure as part of a company’s financial statements of the company is aimed at providing stakeholders a better picture of the company’s finances. The requirement covers all firms that engaged in cryptocurrency transactions.
The notification mentioned three items that must be included in the disclosure. A company needs to disclose “its cryptocurrency holdings as on the date of the financial statements, the total profit or loss on transactions involving these crypto or virtual currencies, and deposits or advances received from any person for the purpose of trading or investing in these currencies.”
India’s crypto firms welcome the new requirement by the government as it gives an air of legitimacy to cryptocurrency transactions. It also signals the government’s intent to regulate crypto trading and investments instead of banning them as suggested by previous reports.
“In light of the recent speculation around ban, allowing cryptocurrencies to be a part of accounting practices will definitely put investors at ease as they no longer have to be worried regarding taxation,” said Monark Modi, founder and CEO of Indian cryptocurrency exchange Bitex, according to Bitcoin.com. “This is a definite endorsement, and it is good to see that India is not falling behind the global cryptocurrency race. Bringing regulation that provides safety to investors, factors taxation, and fosters cryptocurrency as an alternate investment class will be the right step ahead .”
Sumit Gupta, co-founder and chief executive of the Mumbai-based exchange CoinDCX, also welcomed the development as a positive step towards regulation. ““It is a welcome move as the amendment is a great stride towards a regulated environment which is what the industry has been eagerly anticipating,” Gupta said. “Besides ushering in transparency for the system it will enhance the confidence of investors both retail and institutional especially in the wake of ongoing speculations around the cryptocurrency bill.”
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