The Indian government has an agenda to ban the possession, trading, transfer, and mining of all private virtual currencies through a proposed law, which is being dubbed as the world’s strictest measure on digital coins.
At the same time, the government of the South Asian nation is pursuing foreign investment and wooing companies such as Tesla Inc (NASDAQ:TSLA) — which are bullish on Bitcoin (CRYPTO: BTC) — to open shop in the country.
Will the cryptocurrency ban affect the Elon Musk-led company’s Indian foray considering Tesla’s exposure to Bitcoin?
Laying Down The Law:Sources suggest that “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” will be introduced in the current session of the Indian parliament, the second part of which commenced last week.” Cryptocurrency isn’t fiat currency backed by the Reserve Bank of India, and its usage in all forms will be banned through the new law that will be introduced in Parliament,” a person in the Indian finance ministry told BloombergQuint.
To Bangalore Via Amsterdam:Musk, whose Tesla invested $1.5 billion in BTC in February, is planning entry into the Indian market through a circuitous corporate structure in order to save tax, Indian media reported earlier in the year. Tesla’s Indian arm was incorporated with $20,502 in authorized capital and $1,367 paid-up capital in Bangalore. Tesla’s Dutch subsidiary Tesla Motors is the parent of Tesla Motors and Energy India, according to the Economic Times.
Is Tesla In Hot Curry:There is no clarity whether the law has any implication on non-residents of India as the detailed provisions of the bill are not yet public knowledge. If non-residents are not impacted, then it is reasonable to believe that Tesla Netherlands or the parent headquartered in Palo, Alto, California have little to worry about. As long as the Indian subsidiary does not hold, transact, transfer, or trade cryptocurrencies, they would be in compliance with any such future law. However, if the law is extraterritorial in nature, Musk — aserial Dogecoin (CRYPTO: DOGE) tweeter — is in trouble. Article 245 of the Indian constitution allows the country’s parliament to make laws for “whole or any part of the territory of India.” However, it also spells out that “no law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.”
India At Odds With The World:The increased speculation that India would bring into force such stringent regulation is increasingly at odds with other parts of the world where private individuals and corporates are increasingly adopting cryptocurrencies. Investments by Square Inc (NASDAQ:SQ) and MicroStrategy Incorporated (NASDAQ:MSTR) to the tune of billions are a clear indicator in which way the wind is blowing. BTC has soared to new highs touching an all-time high of $61,683.86 on March 13 in such an atmosphere. The apex cryptocurrency traded 4.09% high at $59,129.97 at press time. In such an environment, seven million Indians are the second-largest holders of BTC and hold over $1 billion of the cryptocurrency in their wallets. The government is reportedly mulling giving them all a grace period to shed their positions and exit an asset that is increasingly popular elsewhere in the world.
Price Action:Tesla shares closed nearly 3.7% higher at $701.81 on Wednesday and fell 0.29% in the after-hours session.