Policy

Disclose all cryptocurrency dealings, MCA to India Inc

K.R.Srivats New Delhi | Updated on March 26, 2021

The Corporate Affairs Ministry has made it mandatory for companies to disclose the profit or loss on transactions involving cryptocurrency or virtual currency.

Companies have now been asked to disclose in their annual financial statements the amount of crypto currency held as on reporting date. Also, companies have to now disclose in their financial statements the details of deposits or advances taken from any person for trading or investing in crypto/virtual currency, the MCA has said.

The MCA move comes even as the Centre and the Reserve Bank of India are in active consultation to firm up a framework for regulating cryptocurrencies and looking at even introducing a sovereign digital currency while banning private cryptos.

A government-appointed panel, headed by SC Garg, former Finance Secretary, had recommended banning of cryptocurrency while allowing a sovereign digital currency.

Ashok Haldia, former Secretary of CA Institute, said that cryptocurrency, while not banned in India, is also not regulated. There is considerable lack of clarity around regulatory, accounting, and taxation aspects while the element of risk remains high. “Specific disclosure as now required is thus welcome from the perspective of investors, regulators and other stakeholders. This will also help regulators and authorities in tracking sources of funds used in trading or investing in cryptocurrency,” he said.

Srinath Sridharan, an independent markets commentator, said it’s a good move to collate information on the investments of Indian companies in cryptocurrency.

While the debate about banning crypto-currencies is still on, it would be useful to collate this data on the exposure of Corporate India in such securities. As long as accounting norms can recognise the volatility and liquidity of such securities, it will address any concerns, he said.

Published on March 25, 2021

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