How to open crypto exchange in India
The recent amendments proposed in the Income Tax Act, 1961 have increased the interest of the masses in the crypto segment. The technically sound new generation is even thinking of launching their own crypto exchanges like WazirX or Coindcx in India in anticipation of the regularization of crypto trading in India. But still, the legal scenario is not yet clear as we talk from the perspective of India. The situation of confusion is there in every country regarding the manner they could control cryptocurrency.
When we talk from the Indian perspective, there is no specific law/ regulation/ licensing requirement that is applicable to the crypto exchanges operating in India. Depending on the form of entity, the crypto exchanges would be required to obtain customary approvals from the authorities for doing business in India. For instance, if a crypto exchange is operating in the form of a company, then it shall have to adhere to the necessary provisions of the Companies Act, 2013 and its underlying rules.
Of course, such crypto exchange inter-alia would also have to obtain tax-related approvals and registrations from relevant tax authorities. The exchange would have to obtain a Permanent Account Number (PAN), a Tax Deduction and Collection Account Number (TAN), and a Goods and Services Identification Account Number (GSTIN), and would have to carry out necessary compliances applicable under the relevant tax laws (for ex-filing of income tax returns, monthly deposition of withholding tax, filing of quarterly withholding tax returns, withholding tax certificates, filing of monthly and annual goods and services tax returns, etc.)
The above requirements are general in nature and are equally applicable to any entity that wants to operate and run any other business in India. Till date, there is no regulatory framework that is specifically applicable on the crypto exchanges in India or which governs its functioning. But the Government is giving serious thought to this issue. The cryptocurrency exchanges may have to seek licenses from a designated regulator (like SEBI) to conduct business like the equity and commodity trading platforms once the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is passed, a few reports suggest.
Like exchanges in the equity markets, crypto platforms might have to fulfill a host of eligibility criteria including meeting minimum net-worth and governance guidelines before being granted a license to conduct business in India. The regulator may direct the crypto platforms to follow Know your customer (KYC) norms and disclosure requirements.
The income tax has already been proposed to be imposed on crypto transactions in India by Finance Bill, 2022, and the GST council is also working on the imposition of GST on commission or transaction charges earned by crypto exchanges. As regards the companies Act, 2013, every company transacting or dealing in cryptocurrencies is required to make disclosure of profits or losses derived from cryptocurrencies separately in its financial statements. Thus, the situation is clear to some extent and the Government is seriously making efforts to regulate cryptocurrencies though the same has not been legalized as yet.
So, a question comes to your mind as to whether is it the right time to start a crypto exchange in India??
The answer to this is yes… With the fact that the Government has been looking forward to regulating the crypto segment, the early beginners will certainly be the beneficiaries.
How to open crypto exchange in India
This is where our professional expertise is going to help you. Our team comprising of Income Tax, GST, FEMA & International Taxation experts will guide you from the initial stages of your crypto dream. Our team will guide you not only in the incorporation of your company but also help in fulfilling the day-to-day compliance requirements of the regulators like SEBI & FEMA. Disclosure under various laws will be the key in the case of crypto exchanges where our team will always stand with you. Our team has already given legal opinions to many aspiring entrepreneurs with regard to starting a crypto exchange in India. So, if you are dreaming of a crypto exchange in India, it is the right time to scale…
