On October 2, BuyUcoin released the first draft of \u2018Regulatory Sandbox<\/a>: They Key To Cryptocurrency Mass Adoption In India\u2019. Through the document, the exchange has put forth arguments in favor of cryptocurrency adoption and suggested some of the features which could form the core of a model government regulation for cryptocurrencies in India.<\/p>\n\n\n\n The BuyUCoin document mentions that if India were to ban cryptocurrencies altogether, the fallout would be felt in the jobs sector as well, where the demand for proficiency in blockchain technology is being seen currently. The report cites LinkedIn\u2019s \u201c2020 Emerging Jobs Report India\u201d which mentions blockchain developer as the most sought-after career over the last five years. <\/p>\n\n\n\n Source-based media reports<\/a> have mentioned that even the draft bill that proposes a blanket ban on cryptocurrencies, talks about the adoption of blockchain technology for managing land records, pharmaceutical drugs supply chain or records of educational certificates. However, banning cryptocurrencies would rob the blockchain developers of a prominent use case for their skills, not to forget the several Indian crypto exchanges which would have to shut shop if the ban comes through. <\/p>\n\n\n\n To bolster its argument, the document cites the examples of countries such as Canada, Japan and Australia, among others, which chose to regulate cryptocurrencies, consequently giving a boost to job creation in the sector. <\/p>\n\n\n\n As part of its suggestions for a regulatory framework for crypto in India, the BuyUCoin draft document talks about the need for robust bank-led KYC (know your customer) as well as Anti-Money Laundering (AML) regulations to build compliance. <\/p>\n\n\n\n Rashmi Deshpande, partner at law firm Khaitan and Co also feels that KYC norms could help address the government\u2019s concerns about cryptocurrencies. \u201cRegulations would primarily be required when cryptocurrencies are traded as commodities. Specific KYC norms for cryptocurrency platforms for boarding traders should be put into place,\u201d says Rashmi.<\/p>\n\n\n\n \u201cRegulations around ICOs making the whole fundraising process more transparent would be helpful with a regulatory body like SEBI (Securities and Exchange Board of India) overseeing the process,\u201d she adds.<\/p>\n\n\n\n ICO or initial coin offering is the crypto equivalent of an IPO (initial public offering). ICOs are used to raise funds. A company looking to raise money to launch a new coin, app or service, issues an ICO. <\/p>\n\n\n\n The BuyUCoin draft document also talks about a self-regulation charter in the short term, which could further a model code of functioning among all crypto exchanges in India. <\/p>\n\n\n\n Last month, Mumbai-based crypto exchange told\u00a0Inc42<\/em><\/strong>\u00a0that major\u00a0Indian crypto exchanges were working together\u00a0under the aegis of the Internet and Mobile Association of India (IAMAI) to come up with a self-regulation charter.\u00a0\u201cWe don\u2019t want to further the notion that because there is no law, so crypto exchanges in India have a free hand. We have a draft version ready for our code of conduct and are updating the guidelines in line with the technology changes that have happened in the last few years,\u201d<\/p>\n\n\n\n The recent draft document also suggests bringing crypto earnings under the purview of tax. \u201cThis will allow Indian citizens to become active participants in the global blockchain economy and provide new revenue sources for the government,\u201d reads the document.<\/p>\n\n\n\n It suggests that working professionals should have to claim their crypto earnings under a separate provision of the Income Tax Act. These suggestions in the document seem to be aimed at addressing the government\u2019s concerns about cryptocurrencies being used for terror financing because of their decentralised nature. Requiring traders in cryptocurrencies to declare their crypto earnings for tax purposes would help weed out illegitimate and nefarious use cases of crypto. <\/p>\n\n\n\n Deshpande feels bringing crypto earnings under the purview of tax would be a welcome step. <\/p>\n\n\n\n \u201cConsidering the volumes being traded on a daily basis, clear tax regulations from the Income Tax as well as the GST perspective would only help the government generate more revenue in an ever-growing market,\u201d she says. <\/p>\n\n\n\n The document also suggests that investors in the crypto industry could be enabled to claim dividends from the same with reasonable security policies such as pan card linkage and a minimum income. <\/p>\n\n\n\n Most importantly, BuyUcoin<\/a> talks about the need for inclusion of cryptocurrencies in the Reserve Bank of India\u2019s (RBI) Regulatory Sandbox. A regulatory sandbox is a scheme adopted in many countries to test emergent technologies with less stringent regulations and hence, the environment is more conducive for innovation.<\/p>\n\n\n\n Such an environment allows innovators to test their products and technologies, gain an understanding of their real-world implications and accordingly tweak their product before launching it on a larger scale.<\/p>\n\n\n\n In 2018, the RBI constituted a regulatory sandbox for fintech innovations, but banned cryptocurrencies for the same. Crypto industry experts and stakeholders have been urging the government to allow cryptocurrencies to work within the sandbox, which is a virtual space.<\/p>\n\n\n\n One of the anticipated benefits of opening the RBI sandbox to crypto-led innovations is that it would help widen the government\u2019s understanding of cryptocurrencies. By showing that there are more positive than negative use cases of cryptocurrencies in India, the industry might just be able to convince the government to bring in regulation for good.<\/p>\n\n\n\n It is worth noting that BuyUCoin\u2019s draft document has been prepared after numerous consultations with Indian crypto industry stakeholders. Inc42<\/em><\/strong> has learned that the India chapter of the Government Blockchain Association<\/a> (GBA) has partnered with BuyUCoin, and would take the suggestions mentioned in the draft document to relevant government agencies in the country. The GBA is an international nonprofit association that promotes blockchain technology solutions to governments all over the world. <\/p>\n\n\n\n As for BuyUCoin, the crypto exchange won\u2019t stop here. In a whitepaper, it has proposed the launch of a sandbox, where crypto-based technologies can be tested. The crypto exchange feels that an open-source sandbox API (application programming interface) holds the key to solving transactional anonymity and KYC\/AML concerns of regulatory bodies, as these concerns have long been a thorn in the side of the crypto industry in India.<\/p>\n\n\n\n Bitcoin Settles Above $19K, Why BTC Could Break $19.5K This Time\u201d Daily Crypto Report 14\/12\/2020<\/a><\/p>\n\n\n\nRobust Bank-Led KYC For Crypto<\/strong><\/h4>\n\n\n\n
Self-Regulation For Crypto Exchanges<\/strong><\/h4>\n\n\n\n
Bring Crypto Earnings Under Tax<\/strong><\/h4>\n\n\n\n
Prices<\/strong> <\/h2>\n\n\n\n
![\"Bitcoin](\"https:\/\/www.buyucoin.com\/crypto-labs\/wp-content\/uploads\/2020\/12\/bitcoin.jpeg\")
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