Indian Government Receives Crypto Recommendations on Whether to Ban or Not to Ban Bitcoin
India is a vibrant economy and with its large young population, it is primed for future technology. However, it is also seeped in bureautic inefficiencies and a general mistrust of transparency. To make matters more complicated there have been numerous instances of the misinterpretation of the government's intentions, which themselves have been rather opaque. To get and then give clarity on the issue of digital assets, a committee was formed earlier in the year. And it has been reported that Arun Jaitley, the finance minister of India has now received the recommendations from the panel.
After a lot of behind the scenes drama, Mr. Jaithley has been given a report; however, the actual contents have yet to be publicly released. It is generally believed that the panel recommendations are in favor of a more lenient outlook towards a new legal framework for cryptocurrencies and to welcome them into the ambit of digital assets.
However, as per anonymous sources speaking to Indian news outlet CNBC TV18, there are suggestions that a legal framework should be made within the Reserve Bank of India (RBI) guidelines. This would be to ensure an effective ban on cryptocurrencies; furthermore, the laws will be amended to clearly delineate any dealings in such currencies as illegal.
This sort of conflicting reports is nothing new. The same news source had earlier quoted another anonymous source and had written:” Ending the speculation on virtual currencies such as cryptocurrencies and bitcoins, a government panel has suggested that the government should consider framing a new law for regulating that space.
” It went as far as to say that there were suggestions for “a new sovereign backed virtual or cryptocurrency may be proposed considering global circumstances; probably at a later stage.”
How Did This Story Develop
The word “ban” has been thrown around with alarming regularity, in relation to the crypto regulations in India, however, its reach has always been left open to interpretation. In a speech that spooked the markets, the country's finance minister, in his budget speech, had apparently told the parliament that cryptos will not be considered legal. This was widely reported as India's stance against the new techno currency. What he had actually said was that the government did not consider them legal tender. As Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, put it “The finance minister was clear: cryptocurrencies are not legal tender in India. He did not say that they are not legal in India. There’s a huge difference.”
To further muddy the waters a few months later, the RBI had issued a crypto banking ban. This was again interpreted as a general ban on crypto, by most. The RBI had in fact followed other major banks who had suspended operations pending clarity from the government. In its statement the Central Bank had said that Blockchain raised concerns about consumer protection, market integrity and money laundering, thus it was withdrawing from providing services to business and individuals dealing with virtual currencies.
All this has not only spooked the average Indian who might have been otherwise interested in this technology but also hindered business. In a naturally risk-averse environment, this sort of uncertainty has made any blockchain solution highly unattractive.
In October this year, another news outlet, Quartz India, had published about a high-level government meeting to work out the legal framework “to ban the use of private cryptocurrencies in India.” Again, as pointed out by an analysis site, Crypto Kanoon, “the word ‘use’ may imply that buying, selling, transacting, or its conversion into rupees may be banned but not possession itself.”
Things are at a stage where even the country's highest courts, the Supreme court is involved in a hearing about Cryptos. As a response, the government assured the courts that expert opinion was being sought in the matter. In its counter-affidavit, it stated that the panel was looking to “deliberate the draft report and the provisions of the draft bill on virtual currencies” by December.
What About The Report
The panel that was formed by the Government of India is headed by Subhash Chandra Garg, the country’s Economic Affairs Secretary. With a wealth of experience as an accountant and has worked at the World Bank, he and his team will surely be focussed on the economic aspect and impact of cryptos. Having said that, the report itself hasn't been made public. At the time of writing, there were no public announcements either.
The only bit of news has been from the anonymous sources noted earlier. Taking such unverifiable news with a pinch of sault Nischal Shetty, the CEO of another Indian crypto exchange Wazirx, was quoted saying “Several times we’ve heard such stuff in the news before. Until we get to see the report I would not suggest anyone to jump to conclusions.” Nischal has been a vocal proponent of clarity. He has been running campaigns to spread awareness and has been advocating for positive crypto regulations to be introduced.
Opinions About The Crypto Ban
While at the moment the only thing clear is the lack of clarity, many have been speculating about life after a ban has been introduced. Some have advocated a wait and watch approach. Naimish Sanghvi is the founder of Coin Crunch India publication. He says “Recommendations don't always immediately convert to law,
” pointing at India's slow-moving colossal bureaucracy. Further mentioning other challenges that would certainly pop up, he noted auxiliary issues such as“If they ban it, they have to change the coinage act which currently defines only INR coins and currency as official legal tender.”
The rigidity of the Indian constitution also means that any updates to an existing law have to be tabled in the parliament, itself a time-consuming process.
Then there are the likes of Vishwanath who have been knocking on the doors of justice. He has been at the forefront of the whole Supreme court hearing of the petitions against the RBI crypto banking ban. With a team of lawyers, he has been asking for a date to present his and the crypto industry side of the story. He is upbeat about the chances and says he can “foresee a significant chance that the supreme court will provide an interim relief. In India, regulation takes a long route – so there may be some drafts by December but not the regulation itself.”
Finally, in case the Ban does go through, Quartz India printed “even if the government decides to ban possession [of cryptocurrencies], it will be just impossible to implement it.” The article went on to point out that “The government can successfully ban the known, big exchanges; but then small, hyperlocal exchanges will possibly come up and it will be extremely difficult to keep track of and block them.”
A nation that has been around forever, seems to be taking forever to make up its mind. One can only hope that when the emerging superpower does make up its mind, it does so looking at the prospects of the future.