NEW DELHI: Increasingly, freelancers working with overseas clients are receiving payments in cryptocurrencies. Instead of sending money through banks or via other remittance services, clients have been transferring cryptocurrencies as such transactions are low-cost, instant, and convenient.
According to a report in the Economic Times, some companies involved in cryptocurrency business are hiring Indian developers as contractors and paying them in virtual currencies as they don’t want to deal with the country’s regulations and taxes.
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But lawyers caution against accepting payments in cryptocurrencies. “The government is planning to introduce a Bill to ban all private cryptocurrencies in the country. If it goes through, the only option for the individuals would be to sell it on overseas exchanges,” said Probir Roy Chowdhury, Partner, J Sagar Associates.
Selling it in the overseas market and then remitting the funds back to India will increase the an individual’s compliance burden.
Some countries, like Singapore, have allowed the trading of virtual currencies. For a client based in a country where trading of cryptocurrencies is permissible, and they can make cross-border payments in them.
In India, however, the legal position of cryptocurrencies is unknown. As there is ambiguity and the law is not yet settled, many individuals continue to trade in virtual currencies. “Due to the grey areas, trading or receiving payment is not yet illegal,” said Chowdhury.
But those receiving payments in cryptocurrencies need to keep in mind that they are not considered legal tender. “Due to this, it could get challenging to seek relief in court against a client or the employer,” said Chowdhury.
The government had planned to introduce The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the Budget session. As it was not tabled, the details are not yet known. There is speculation that the Bill may offer existing investors of cryptocurrencies an exit option within a stipulated time frame.
Reserve Bank of India (RBI) governor Shaktikanta Das had said that cryptocurrencies could hurt financial stability, thus impacting the economy. The central bank is working on launching its digital currency.