After much waiting and speculation on the July 5 deadline, India may forgo banning investment in cryptocurrency after all.
The three-month time span from the Reserve Bank of India’s initial announcement that all RBI regulated entities must cease any crypto related activities, including both individuals and firms, was filled with speculation on how the authorities would handle such a ban. Today new information from a finance ministry panel assembled to study the issue indicates there may not be a blanket ban.
Subhash Chandra Garg, the joint secretary of the department of economic affairs, said that draft regulations should be finished soon. The cryptocurrency task force, set up by the Indian government, however, is made up by financial regulators that include the deputy governor of RBI.
Anirudh Rastogi, a managing partner at TRA Law, called the ban “unconstitutional at various levels … know-your-customer (KYC) and anti-money laundering (AML) verification should be enough to prevent illicit activity.”
At the very least, this is what one government official said to Quartz, speaking under the condition of anonymity.
“I don’t think anyone is really thinking of banning [cryptocurrencies] altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as [a] commodity may let us better regulate trade and so that is being looked at,”
Although the future is still uncertain, we now know that the committee set up to draft these initial regulations is primarily concerned with tracing fund sources and preventing money laundering, according to the senior official who spoke to Quartz. He added,
“Trade is not a criminal offense. Most of us trade in various asset classes on the stock market. So how is this any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing,”
The Cryptocurrency Panel first set up in April 2017 was mandated with “slowly choking” the cryptocurrency market to death within the country. Now though the panel is regulating a seemingly healthy debate on whether digital assists should be considered as commodities or currency. R Gandhi, a former RBI deputy governor, said about the debate:
“If these (cryptocurrencies) are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
As expected, the country will not let the RBI decision rest. It seems that resistance is being felt from all levels, within the crypto community, from exchanges and even from government officials.
Because of this, the government cannot ignore the countries desire to succeed within this industry. Indeed, India are at the fore of a blockchain revolution and therefore, the abolishment of cryptocurrency is only damaging their progression