The State of Crypto and Blockchain Regulations in India
Get the latest news on crypto and blockchain regulations of India.
Around 7 million Indians have already pumped in over US$1 billion into cryptos and the government has the tough task to allow fintech space to flourish in India while making sure it’s done without safety concerns.
The Parliamentary Standing Committee for Finance has met various stakeholders and experts, a first for the panel on cryptocurrency and related issues. The panel stressed on the regulation of cryptos but not completely shutting the door on them. The members of the Parliamentary panel are said to have wished for govt officials to appear before it and address their concerns. There was a consensus that a regulatory mechanism should be put in place to regulate cryptocurrency. Industry associations and stakeholders were not clear as to who should be the regulator
The Members of Parliament (MPs) have expressed concerns over the security of investors’ money. Amid all these developments, there are reports that the government may bring cryptocurrency Bill in the Winter Session of Parliament. The proposed bill would focus on investor protection as cryptocurrencies come under a complex asset class category.
For starters, India has had a hot-and-cold relationship with digital currencies in the past few years. In 2018, it effectively banned crypto transactions after a string of frauds following Modi’s sudden decision to eliminate 80% of the nation’s currencies, but the Supreme Court struck down the restriction in March 2020.
After the Supreme Court overturned the RBI’s order, which effectively lifted the ban on cryptocurrency trading in India, the craze in the country has grown at a furious rate. Following this on February 5, 2021, the central bank had instituted an internal panel to suggest a model of the central bank’s digital currency. An inter-ministerial panel on cryptocurrency under the Chairmanship of Secretary (Economic Affairs) had recommended that all currencies except those issued by the state should be banned.
The Reserve Bank of India (RBI) has repeatedly reiterated its strong views against cryptocurrencies saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them as well as their claimed market value. Currently, there are no particular regulations or any ban on use of crypto currencies in the country. The union government has not yet enacted a law on cryptos, but is in consultation with industry experts, comments from various officials and ministers.