December 10, 2018 11:48 PM
With the submission of a government report to India’s finance minister, the country may be closer to regulating cryptocurrency.
Although confirmed details are scarce, a recent CNBC report indicates that an Indian government panel has suggested a legal framework for cryptocurrency regulation. The panel’s recommendations have reportedly been submitted to India’s finance minister, Arun Jaitley, and could finally deliver clearer crypto legislation for the world’s fastest growing economy.
However, considering India’s current stance on cryptocurrency, any resulting framework might not be positive. Even if the submission detailed positive regulation for the sector, the framework could be outright rejected.
In his 2018-2019 budget speech, which was delivered in February 2018, Jaitley explicitly said the Indian government “does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
The Reserve Bank of India (RBI) also outlawed banks from providing services to cryptocurrency companies earlier this year. One of India’s largest crypto exchanges, Zebpay, closed in September 2018 as a result, saying the ban had “crippled” its operations.
Despite the RBI’s attitude toward external cryptocurrencies, its annual report (issued in August 2018) maintains that it is investigating the “desirability and feasibility” of a central bank digital currency.
After India’s Financial Stability and Development Council (FSDC) met in October, the country appeared to be getting closer to a concrete crypto ban, but the result was further “deliberations” about a legal framework to ban the use of private cryptocurrencies. The FSDC did not say mining or owning crypto would be completely banned, however.
Nischal Shetty, founder and CEO of Indian cryptocurrency exchange WazirX, recently talked to Quartz India about the possibility of a ban: “[E]ven if the government decides to ban possession, it will be just impossible to implement it.”
Shetty believes that a ban on cryptocurrency exchanges would lead to the appearance of small, unregulated exchanges throughout the country, which would be “extremely difficult” to track and block. Further, by using his Twitter platform, Shetty actively campaigns for a more positive crypto stance in India:
Any legal framework would need to be approved by India’s parliament, and legislative changes in India often take time. With a population of over 1.3 billion and steady economic growth of between 7 and 9 percent, though, restricting cryptocurrency use in India could impact the global crypto economy.
Melanie Kramer is a freelance FinTech, blockchain, and cryptocurrency writer based between France and Canada. Melanie has studied, and retains an avid interest in, global politics, business, and economics.
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