India needs to get to grips with the regulation of cryptocurrencies such as bitcoin. Chetan Tripathy and Roochi Tripathy explore the options

Cryptocurrencies such as bitcoin aim to accelerate the process of integrating people into a cashless society. Bitcoin, a predominantly libertarian ideology which is also attracting capitalists, seeks to do away with financial institutions acting as intermediaries for financial services that should remain free to access and operate.

This article explores the technical aspects of bitcoins in a non-technical manner as well as the relevant taxation and regulatory challenges governments face. The article examines: (a) how regulators in Singapore and the US have formulated know your customer (KYC) and anti-money laundering (AML) guidelines for bitcoin businesses; and (b) the taxation policy of Singapore’s Inland Revenue Authority for bitcoin businesses. Based on policies in these countries, possible KYC/AML guidelines and taxation strategies for bitcoin users and businesses in India are proposed.

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Chetan Tripathy works in the corporate legal group at ICICI Bank and specializes in hedging, securitization and fundraising. Roochi Tripathy previously worked in ICICI’s corporate legal group and is now a freelance lawyer in Mumbai. The authors would like to thank Aditi Sharma, Aravind NV and Tahir Ashraf Siddiqui for their valuable feedback.