Thursday, 15 March 2018

INCORPORATION OF A CRYPTO CURRENCY COMPANY IN INDIA


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


 For more details, contact CS Neha Seth at csnehaseth@gmail.com or call us at 9871903449








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