Indian Government Engages RBI to debate Cryptocurrency Regulation

The government of India is reportedly discussing a regulatory framework for cryptocurrencies with the financial institution, the Federal Reserve Bank of India (RBI), and therefore the Securities and Exchange Board of India (SEBI). Furthermore, the govt is awaiting the result of another cryptocurrency case at the supreme court to form its final judgment on crypto regulation.

The Indian government has thus far been quiet about whether it plans to manage or ban cryptocurrencies. While there’s a draft bill that seeks to ban all cryptocurrencies except state-issued ones, BloombergQuint reported on Friday that the govt is currently discussing the prospect of regulating cryptocurrencies with the financial institution. Citing “people conscious of the event,” journalist Nikunj Ohri detailed:

The government is weighing whether the virtual currencies are often regulated by the Federal Reserve Bank of India … A framework for the regulation is going to be decided upon after deliberations with the financial institution .”

The discussions are at a nascent stage but the framework might not permit the utilization of cryptocurrencies within the country’s payment systems and can not recognize them as tender, the publication noted, elaborating:

“The digital currencies could also be notified or approved by the RBI, and cryptocurrency exchanges might be recognized and controlled by the Securities and Exchange Board of India.”

Furthermore, the govt is reportedly expecting the result of another cryptocurrency case at the supreme court, scheduled for April 27. The court is predicted to listen to a few of writ petitions, one among which seeks to ban cryptocurrencies and declare them illegal while the opposite seeks to manage them. The petitions were filed in 2017 but the hearing has been postponed so far.

This case is broken away the RBI ban case which the court ruled on March 4, quashing the central bank’s April 2018 circular which prohibited regulated financial institutions from providing services to crypto businesses. Some banks, however, still refuse service to crypto businesses, including HDFC and Indusind Bank. The RBI reportedly said that it’ll file a review petition with the supreme court since it believes that the anonymous nature of cryptocurrencies poses a threat to the country’s banking industry. The financial institution has until April 3 to file this petition. Meanwhile, the supreme court’s ruling has boosted the crypto industry in India as global investments begin flowing into the world.

Is the Indian Government Changing Its Mind About Banning Cryptocurrencies?

The Indian government has been deliberating on the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” since February last year. The bill was drafted by the interministerial committee (IMC) tasked with studying all aspects of cryptocurrencies and providing recommendations for the country. The committee was heading by former Finance Secretary Subhash Chandra Garg. The Indian crypto community believes that the bill is totally flawed and has been campaigning for the govt to reevaluate the IMC recommendations. Garg has since left his position in government. This bill was alleged to be introduced within the winter session of parliament last year but it had been not.

An official explained that an entire ban on cryptocurrencies wouldn’t only be difficult to implement but also cause underground cryptocurrency trading, Ohri conveyed. Regulating them, on the opposite hand, would enable the govt to oversee their activities, thereby preventing their usage in illegitimate activities. Moreover, the official asserted that albeit most of the IMC recommendations were accepted, the govt still has the facility to exempt some cryptocurrencies and related activities, including using, holding, selling, dealing in, and mining. The official was quoted as saying:

“The change in bureaucracy at the highest level, from the time when an outright ban on cryptocurrencies was considered, has also led to a shift from the previous stance.”

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