India, Despite is Current Bitcoin Boycott, Has Key Cryptocurrency Initiatives in Place and Progressing
As crypto becomes more mainstream, governments are beginning to adopt and formulate crypto-related policies and initiatives. One of those that’s stood out is the Indian government.
The country’s government has been involved in activities meant to help the regulation of cryptos and aid its adoption. The following are some of the initiatives they’ve taken towards that end.
Established a Cryptocurrency Law Committee
The country established a committee to draw up the regulatory framework for cryptocurrency and all related activities.
Members of this committee include representatives from the Department of Economic Affairs, the Central Board of Direct Taxes, the Securities and Exchange Board of India, the Reserve Bank of India and Ministry of Electronics and Information Technology.
Their focus will be on all aspects of cryptocurrencies as well as regulatory protocols. This is coming on the heels of the expected creation of legal frameworks for crypto assets and virtual currencies.
Also, rumors about the circulation of a bill -“Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019”- has been rife.
With many wondering if the bill has even been sent to the appropriate ministries. The good news is that, in spite of the widely circulated rumors, the fears of the public have been assuaged by the active cryptocurrency community in the country. These communities have simply tagged them as rumors without any merit.
Collaboration with G20 and Financial Action Task Force (FATF)
The country’s 2018 Financial Ministry’s Summary report stated that the Department of Revenue has been collaborating with both the G20 and FATF to develop a finance related paper that will serve as a guide for all participating countries.
The FATF intends to present crypto assets and virtual currency regulation policies at a G20 summit in June, 2019. The policies will most likely target the restriction of cryptos used for funding terrorism and money laundering activities.
Reserve Bank of India Warnings and Restrictions
The RBI has been at the forefront of warning the public of the risks of crypto assets. Not just that, they’ve take further steps to prevent regulated financial institutions and organizations from carrying out crypto-related activities.
As a result, all previously participating institutions were only given 90 days to sever all ties with crypto activities.
In the April 6th circular, the RBI stated that
“Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer/receipt of money in accounts relating to purchase/sale of cryptocurrencies”.
This policy automatically saw many local crypto-related businesses taking a hit. But, others adapted and have recovered, by modifying their business to the exchange-escrowed p2p crypto trading model.
Naturally, this ban on crypto activities in the country has seen the crypto community in India, protesting against it and doing everything to reverse the ban. It still remains in effect though.
Indian Crypto Community Takes RBI to Court
As part of their efforts to reverse the ban, and reactivate crypto activities in the country, the crypto community in India filed several writ petitions aimed at lifting the ban on crypto, with the Supreme Court.
Unfortunately, the cases has been continually adjourned, with the next hearing date fixed for July 23, 2019. Also, the court has requested the defendant (the Government) to submit its report on the regulatory framework for cryptos. This way, the court can actually give a fair judgment.
Active Participation at the India Blockchain Summit
Early this year, the country held its blockchain summit. This saw participants like the Department of Information Technology, Ministry of Human Resources Development, Ministry of Law and Justice, Ministry of Commerce and Industry and State Government of Uttar Pradesh at the event.
These organizations were part of the various discussions around STOs, ICOs and crypto regulations. At the end of the summit, Cashaa, the summit’s fintech partner stated that the country’s policy makers were focused on accelerating regulations. The timeline given for the implementation of crypto regulations is slated for end of the fiscal year.
Focus on Possible Central Bank Digital Currency
In Dec, 2018, the Ministry of Finance confirmed that the committee set up to look into the crypto affairs, is looking into all aspects of crypto assets, with the possibility of introducing an official digital currency. If approved, this currency would be the nationally recognized cryptocurrency instead of bitcoin or others.
SEBI ICO and Crypto Study Tours
Organizations like SEBI reported that they were taking cryptos and its related activities seriously. SEBI for instance, had already “
“Organized study tours to Financial Services Agency (FSA) Japan, Financial Conduct Authority (FCA) UK and Swiss Financial Market Supervisory Authority (FINMA) Switzerland to study initial coin offerings and cryptocurrencies.”
The idea of the study tours and committee was to ensure that the country taps into the possible opportunities that crypto offers, as well as identify and solve possible challenges and risks associated with the newly emerging technology.
In their report, they noted the crypto as well as other new fintech are affecting financial markets through multiple channels. As a result, they intend to study these to identify all possible risks and rewards associated with adopting and using these tech.
Cryptocurrency Cybercrime Outfit
With crypto being increasingly used for fraud and other events, the country has launched a National Cyber Forensic Lab as well as Cybercrime unit in Delhi Police.
These entities are designed to help spot and identify fraud related crypto transactions. The lab has tech that’ll help it with data recovery from corrupted, failed or even damaged hard drives.
It’ll also be able to carry out crypto transaction analysis, and retrieve malware data from over 33,000 phone models. This way, they can basically get any information from any device that can store crypto assets and execute crypto transactions.
Partnership with Other Countries
More specifically, Canada. During a recent meeting of the Canada-India Joint Working Group on Counter-Terrorism, the country’s top level representatives talked about many things including the need to tackle the problems posed by new emerging technologies like cryptocurrency. According to the press release,
“The delegations reviewed efforts underway to address new and emerging challenges posed by virtual currencies,” the announcement reads, adding that “The meetings concluded with agreement on a joint action plan” which includes “joint capacity building and information and technology sharing.”
Report from Institute of Chartered Accountants of India (ICAI)
In January 2018, the Indian Ministry of Corporate Affairs asked the ICAI to carry out a study “on accounting standards and disclosures of cryptocurrency in financial statements of companies”
To that end, the body launched a course on cryptocurrency and blockchain technology for professional accountants, as part of its curriculum.
RBI’s Warm Acceptance of Blockchain Tech
The Reserve Bank of India recently released a draft framework targeted at creating a regulatory sandbox that encourages the establishment of blockchain tech related businesses.
So, as long as businesses were solely focused on blockchain and smart contracts, they’re well within the bounds of the regulation.
However, businesses focused on just crypto related services and products were prohibited in the document. Of course, these could still be subject to review if a new government steps in and ousts the current one that formulated these policies and drafted these regulations.