A few months back a notice was sent to many cryptocurrency exchanges from the Financial Intelligence unit in India. This was for regulatory reasons and there was a panic situation around the investors too. This created a lot of confusion among the investors on whether to trust these foreign-based exchanges or not. Some people who were trading regularly on Binance also had this question in mind if they should continue doing it.
One of the primary reasons why FIU had to send this notice to these foreign-based exchanges was for the fact that they were not giving any data to the Indian government. They wanted some regulations in place and that's why they had to send a notice to Binance and so many other exchanges. I did write an article a few months back on this topic. There was also an official announcement from Binance saying that people need not panic and they will find a solution to this problem.
As said, now Binance is fully compliant with FIU, and Kucoin is also joining hands with Binance to accept those regulations. The notice was sent to so many other exchanges and those exchanges decided to ban trading in India because of these regulatory concerns. But Binance and Kucoin decided to give whatever FIU wanted from them and accepted a deal that would end up being good for everyone.
We are good to trade on Binance and Kucoin
For people who are okay with the government to see what we are doing in Binance and Kucoin, this is a good move because there is enough data available on Binance and Kucoin that can make the tax work easier. In the future, there might be automated tax deduction schemes introduced making it easier for people to not pay taxes separately but this would have been already done as TDS on those websites. It would be a cool thing because it is hard to manually calculate it and do the taxation. If Binance and Kucoin can add that support in the future where we can see a statement of all the trades and what we owe to the tax department, it will be awesome to include it while filing the returns.
As these two exchanges are on good terms with the FIU, people are free to use these exchanges for their Virtual Digital Asset transactions. As they are based outside India, it was a concern if that was okay or not. The director of FIU India said that it is okay to have them outside India as long as they provide the necessary information that FIU needs on demand.
Alert to people who do suspicious transactions
FIU has now clearly said in the report that they have full access to the transactions that are happening from India by Indians. All those transactions are tracked so that any suspicious transactions might get caught and there is no big harm but the individual will have to explain those transactions and have to pay the right amount of TDS. One of the biggest reasons why they wanted to do these regulations is because there is a lot of Money laundering activity happening with these exchanges. Even through P2P, many such transactions are happening and the government would like to prevent it from happening.
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