March 26, 2021 3:00:54 am
The ministry of corporate affairs has enhanced disclosure requirements in financial statement filings to be made by companies to include cryptocurrency and virtual currency transactions and holdings, loans to key managerial personnel and trade payables to MSMEs.
Experts noted that the requirement of disclosures of cryptocurrency transactions and holdings could indicate the government is willing to permit the use of cryptocurrencies and regulate them.
So far, India has gone back and forth on the issue of cryptocurrencies. The government’s new bill — Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 — aims to prohibit all private cryptocurrencies while setting the stage to roll out the legal framework for an “official digital currency”. Back in 2018, the Reserve Bank of India (RBI) had ordered banks to not allow the use of their systems for transactions involving cryptocurrencies — a decision that was overturned by the Supreme Court of India in March last year.
Crypto exchange CoinDCX’s co-founder & CEO Sumit Gupta said: “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. 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”.
Atul Pandey, partner at law firm Khaitan and Co. also noted that the move indicated that the finance ministry and the RBI may be open to regulating cryptocurrencies instead of banning their use.
The amended regulations also call for increased disclosures of both trade payables and trade receivables including whether they are disputed and the likelihood of payment. The move may also help the government push its agenda of requiring companies to expedite payments to MSMEs.
Past president of the Institute of Chartered Accountants of India Atul Kumar Gupta said the enhanced disclosure requirements including disclosures on loans made to key managerial personnel and related parties were a positive step in improving transparency and accountability and were especially necessary for public interest entities which had used public funds.
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