Govt Mandates Companies To Disclose Crypto Dealings In Financial Statement
All companies that have traded or invested in the virtual tokens will have to disclose profit or loss on transactions, amount of currency held and details of any deposits or advances with any person for the purpose of trading or investing in the virtual tokens
The government has mandated all companies in India to disclose details related to dealing in cryptocurrencies in their balance sheets, as per a notification from the ministry of corporate affairs.
A company that has traded or invested in the virtual tokens will have to disclose profit or loss on transactions involving a cryptocurrency, amount of currency held at the time of reporting and details of any deposits or advances with any person for the purpose of trading or investing in the virtual tokens, said the notification that has outlined the various amendments in Schedule III to the Companies Act, 2013.
The new rule will be effective from the upcoming financial year.
This is the first ever regulatory move that the government has taken with respect to cryptocurrencies.
“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,” said Sumit Gupta, co-founder and CEO, CoinDCX, a crypto trading platform.
“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 (sic).”
Gupta is referring to the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. While the contents of the bill are not in public domain yet, in February the finance ministry had hinted at a blanket ban on cryptocurrencies through the bill. Several media reports have confirmed the suspicion of a possible ban quoting senior officials in direct knowledge of the developments.
However, shifting from her original strict stance against the virtual tokens, last month FM Nirmala Sitharaman in a media interview said the government will ensure a window to allow all kinds of experiments in the crypto world before arriving at a conclusion. “There will be a very calibrated position (with regards to cryptocurrencies),” she said.
The ongoing speculations have not deterred investors from investing in cryptocurrencies such as bitcoin and ethereum as crypto exchanges have not reported a decline in trade volumes or major withdrawals.
Globally, major companies like Tesla, Square and MicroStrategy are holding bitcoin, the most popular cryptocurrency, on their balance sheets, whereas no major Indian institutional investor has come forward to publicly endorse cryptocurrencies.