In the wider public interest, the government may seek to establish certain boundaries for crypto in India after multiple rounds of caution.
There have been some fast-paced changes on the way forward for digital currencies in India amid growing cryptocurrency excitement, with RBI governor Shaktikanta Das kicking it off by sounding a note of caution on cryptos.
“There are “far deeper issues” involved in virtual currencies that could pose a threat to India’s economic and financial stability,” Das said a few days ago, while reiterating his position recently, saying, “There are “far deeper issues” involved in virtual currencies that could pose a threat to India’s economic and financial stability.”
Prime Minister Narendra Modi, on the other hand, recently presided over a high-level meeting in which he expressed concern about unregulated crypto markets becoming conduits for money laundering and terror financing.
During the PM’s meeting, there was also agreement on how to discourage marketing from over-promising and misleading young investors.
The Parliamentary Standing Committee on Finance has met with a variety of stakeholders and specialists on cryptocurrency and associated concerns, which is a first for the body. The panellists emphasised the need for cryptos to be regulated, but did not fully dismiss them.
Members of the Parliamentary subcommittee reportedly expressed a desire for government officials to appear before them and explain their concerns. There was agreement that bitcoin should be regulated by a regulatory structure. Who should be the regulator was a point of contention among industry organisations and stakeholders.
Members of Parliament (MPs) have expressed worries about the security of money invested by investors.
In the midst of all of this, there are rumours that the administration may introduce a cryptocurrency bill in Parliament’s Winter Session. Because crypto currencies are a complicated asset class, the proposed bill would focus on investor protection.
Meanwhile, let’s take a look at what India may or may not accept in terms of cryptocurrency.
To begin with, India has had a tumultuous relationship with digital currencies in recent years. It effectively prohibited crypto transactions in 2018 after a run of frauds followed Modi’s abrupt move to abolish 80% of the country’s currency, but the restriction was overturned by the Supreme Court in March 2020.
The mania in India has risen at a frenetic rate after the Supreme Court rejected the RBI’s judgement, thus lifting the restriction on cryptocurrency trading in India.
Following this, on February 5, 2021, the central bank established an internal panel to develop a digital currency paradigm.
Under the chairmanship of Secretary (Economic Affairs), an inter-ministerial council on cryptocurrency advised that all currencies save those issued by the government be prohibited.
The Reserve Bank of India (RBI) has consistently stated its opposition to cryptocurrencies, claiming that they constitute a severe threat to the country’s macroeconomic and financial stability, and that the number of people trading on them, as well as their purported market value, are both suspect.
There are currently no specific restrictions or prohibitions in place in the country regarding the use of crypto currencies. The union government has not yet passed a crypto law, but it is in the process of doing so after consulting with industry experts and receiving input from various authorities and ministries.
In the wider public interest, the government may seek to put certain boundaries for cryptos in India after numerous rounds of caution. However, the prevailing perspective within government, based on the previous PM meeting, is that moves taken will be proactive, “progressive, and forward-looking,” as cryptos are an emerging technology.
To win acceptability and avoid a prohibition, the crypto community has made repeated statements to Indian authorities, requesting that it be classed as an asset rather than a currency.
According to an Economic Times storey, the government is considering banning cryptocurrencies from being used for transactions or payments, but allowing them to be retained as assets like gold, stocks, or bonds.
According to the same article, the Securities and Exchange Board of India (Sebi) could be named as the regulator, though this has yet to be decided.
According to blockchain analytics company Chainalysis, India’s digital currency industry was worth $6.6 billion in May 2021, up from $923 million in April 2020.