India’s NSDL and CDSL will control maintenance nodes for the new decentralised network
Elsewhere, a council responsible for indirect taxes in India is considering a 28% tax on crypto-related activity
Celebrating its 25th anniversary at the end of last week, the National Securities Depository (NSDL), based in Mumbai, launched a blockchain-based or Distributed Ledger Technology (DLT) platform for debenture covenant monitoring.
The platform was created as a product of collaboration between the NSDL and the Securities and Exchange Board of India (SEBI) to enhance securities and covenant monitoring. In effect, it should help bring more clarity and discipline to the market.
It will expand to involve other regulators
The DLT platform will function by providing an immutable trail of transactions and asset charges between issuers and trustees of debentures. India’s two depositories, the NSDL and SEBI’s Central Depository Services Ltd. (CDSL), will be entrusted with two nodes for maintaining this decentralised network. However, in the future, more regulated bodies would be allowed to onboard the ecosystem, thereby establishing the nodes.
SEBI chairperson Madhabi Puri Buch explained that blockchain was chosen for its underlying transparency but decried the expensive nature of this technology. She also observed the anonymity associated with interacting in such a network, noting that regulators in the country are uncomfortable with this trait.
“This is the single biggest differentiator between private DLT manifestations and what we commonly refer to as Central Bank Digital Currencies where it is not envisaged that this aspect of the technology would be put to use as we don’t wish to have anonymity,” Buch said.
NSDL is the oldest depository in this Asian country and controls up to an 89% market share in terms of the value of securities assets.
The SEBI last year directed that depositories employ blockchain tech infra to covenant monitoring and securities. All data previously logged onto centralised databases will now be cryptographically stamped and added to the DLT platform.
Indian users could face a 28% crypto tax
According to a new report by CNBC-TV18, the body responsible for reaching decisions on indirect taxes, the goods and services tax (GST) Council, is considering establishing a 28% GST on services and activities involved with crypto assets.
The proposal was reportedly introduced by an official committee commissioned by the Council, and it’s expected the matter will be tabled at the next Council meeting.