INCORPORATION OF A
CRYPTO CURRENCY COMPANY IN INDIA
Background
Today, digital forms of money
also known as cryptocurrencies have transformed into an overall wonder known to
most by far. A cryptocurrency (or crypto currency) is a digital asset designed
to work as a medium of exchange that uses cryptography(is
the practice and study of techniques for secure communication) to secure its
transactions, to control the creation of additional units, and to verify the
transfer of assets
Bitcoin,
created in 2009, was the first decentralized cryptocurrency,
since then, numerous other cryptocurrencies have been created. These are
frequently called altcoins, as a blend of alternative
coin.
Most
common cryptocurrencies are:
1.
Bitcoin
2.
Ethereum
3.
Ripple
4.
Bitcoin
Cash
5.
NEM
6.
Litecoin
7.
IOTA
8.
NEO
9.
Dash
10. Qtum
11. Monero
12. Ethereum Classic
Are Bitcoins/Crypto currency Legal??
As cryptocurrencies are becoming
more and more mainstream, law enforcement agencies, tax authorities and legal
regulators worldwide are trying to understand the very concept of crypto coins
and where exactly do they fit in existing regulations and legal frameworks.
A lot of concerns have been
raised regarding cryptocurrencies’ decentralized nature and their ability to be
used almost completely anonymously. The authorities all over the world are
worried about the cryptocurrencies’ appeal to the traders of illegal goods and
services. Moreover, they are worried about their use in money laundering and
tax evasion schemes.
As of November 2017, Bitcoin and
other digital currencies are outlawed only in Bangladesh, Bolivia, Ecuador,
Kyrgyzstan and Vietnam, with China and Russia being on the verge of banning
them as well. Other jurisdictions, however, do not make the usage of
cryptocurrencies illegal as of yet, but the laws and regulations can vary
drastically depending on the country.
As per Companies Act
2013, if the business activities consist of Banking, Insurance, Venture
Capital, Mutual Fund, Stock Exchange, Asset Management, Architecture, Merchant
Banking, Securitization and
reconstruction, chit fund and non banking financial activities then In
principle approval from Regulatory authority is required. Now, RBI is not recognizing
Bitcoin/ Cryptocurrency and has been issuing warnings for that.
RBI Approval and warnings
The Applicant is
required to take approvals from Reserve Bank of India (RBI) for incorporating
the company indulged in the business relating to Crypto currencies.
But RBI is not
giving approvals for such incorporations instead they are issuing warning
letters (Attached below)
Thus incorporating a
Crypto Currency company in India is a difficult task without RBI Approval,
though many players already doing business like Zebpay etc. but once the
Approval from RBI (and/or any other regulatory authority if required in
addition to RBI) is received the process of Incorporation is as follows:
1. Obtaining Digital Signatures of the Subscribers and
atleast one Director
2. Obtaining Company name approval from CRC by Filling
Name reservation through RUN (Reserve Unique Name) (A new portal Launched by
MCA), this step is optional as you can also apply for Name in the Incorporation
form itself. To know more about RUN, pls click below;
3. Prepare drafts like Affidavit and Affidavit cum
Declarations on non judicial stamp papers (After Companies Amendment Act 2017
gets notified, instead of Affidavits, only declarations will be required) Memorandum
of Association and Articles of Association for Incorporation of a company.
4. File Company Incorporation form along with the
signed attachments
5. Obtaining Certificate of Incorporation
