What is the intention of MCA?.. To trap Crypto Owners?

“The Hindu Business Line” news paper carried a headline today stating : “A Glimmer of Hope for Cryptos in India”

Economic Times says : “Crypto Disclosures to protect Investors; MCA”

A statement attributed to an official states “The move would bring in greater transparency in the activities of companies engaging in trading of cryptocurrencies, which are not legal tender in India” .

We are aware that the media particularly the above two publications hold an editorial policy in support of the legalization of the Digital Black Currency in the name of Bitcoin and its various avatars.

We are also aware that there are many in the Government particularly in the Finance Ministry who are sympathetic to Bitcoins.  So also many judges in the Supreme Court.

We have been demanding that the Government officials, Judges and also businessmen should declare their holdings of Bitcoin and all related “Private Cryptos”.

In the light of the above demand, if we look at the MCA notification it is clear that MCA has thrown a gauntlet at the Digital Black Money holders.  It could be considered as a clever move to trap the holders of Digital Black wealth.

We are aware that many corporates who were attacked with ransomware demands, did pay out using Bitcoins. Obviously, they should have diverted their white money into buying Bitcoins and it would not have reflected in the Balance sheet. Now they need to disclose the transaction along with the source of payment, details of the seller and the exchange through which they bought.

If they have used their personal black money, then they cannot disclose the transaction. If the seller has sold it from his black wealth, he will need to explain. If the Exchanges claim that they are doing KYC, they need to declare the identity of the people involved. If the transaction has gone through a Bitcoin wallet held abroad, there is a possibility of a havala transaction.

If the companies donot declare their Bitcoin holdings, if and when the Government bans the Crypto and gives a window for existing investors, the Companies who have hid the transaction now cannot declare later.

The same argument applies to the individuals. They now need to declare their crypto assets in this year’s tax return and if they do, have to explain the source. If they donot, then they permanently remain black money holders and in the eyes of Indian law remain tax evaders.

Damned if you do and Damned if you don’t.

I am sure that the same publications which are today welcoming the MCA move will tomorrow ask for more concessions to ensure that the current holders are given immunity. Then the same people who were opposing the Electoral Bonds, Bearer Bonds and the schemes for regularization of previous tax defaults will have to eat their words.

Let us observe how things develop….



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About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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