- The Indian government may form a new group to discuss how to regulate the use of cryptocurrencies in the country.
- Previous plans to ban the asset class “are dated,” said one source.
India’s government is looking to convene a panel of experts to consider crypto regulation in the country, according to a report in local news outlet The Economic Times.
According to unnamed sources quoted by ET, the panel would explore ways of regulating cryptocurrency as digital assets rather than as currency, rejecting previous recommendations for an outright ban on cryptocurrency in the country.
A previous committee headed up by former Finance Secretary Subhash Garg in 2019 recommended a blanket ban on cryptocurrency, with harsh punishments for using or owning crypto. However, said an unnamed official quoted by ET, “There is a view within the government that the recommendations made by [Subhash Garg] are dated and a fresh look is needed at [the] use of cryptos rather than a total ban.”
India’s back and forth on crypto
The Indian government and the country’s central bank have vacillated on the status of cryptocurrency in the country. In 2018, the Reserve Bank of India attempted to ban crypto traders and crypto firms from accessing banking services; the move was overturned by the country’s supreme court in March 2020.
The government, following the recommendations of the panel convened by Subhash Garg, then pressed ahead with plans to introduce a bill that would ban cryptocurrency in the country. Under the terms of the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021”, citizens caught using crypto would face fines of up to 250 million Indian rupees (around $3.3 million) or up to ten years in prison.
Following pushback from the Indian crypto industry, the country’s Minister of Finance and Corporate Affairs, Nirmala Sitharaman, hinted that the government was considering softening the bill, noting that the government’s position on crypto would be “calibrated”, with “a window available for all types of experiments in the crypto world.”
The bill, which was scheduled to be tabled in the Parliament’s budget session in March, was then deferred; according to Anurag Thakur, Indian Minister of State for Finance and Corporate Affairs, as a result of plans changing due to local elections. According to ET it is “widely expected” that the proposed legislation will be tabled in the upcoming monsoon season.
Thakur emphasized that the government wanted to protect investors against volatility in the cryptocurrency market, prompting speculation that the government was looking to regulate crypto rather than impose an outright ban. According to ET, Thakur’s name is among those under consideration for a role on the proposed committee.
In the meantime, enthusiasm for cryptocurrency in India shows no signs of abating. India’s largest crypto exchange WazirX reported trading volumes of $2.3 billion in February, up from $1.4 billion a month earlier. And in March 2020, even as reports of the looming crypto ban swirled, crypto exchange announced that it was establishing a business presence in India.