India Not Banning Crypto
According to local news outlet NDTV on Thursday (Dec. 2, 2021), a cabinet note being circulated by the Indian government as seen by the news outlet revealed that there was a suggestion to regulate private cryptocurrencies rather than ban them.
The latest development is contrary to earlier reports, where the Parliament was considering a bill seeking the ban of private cryptocurrencies. The bill was similar to a draft first proposed back in January 2021.
NDTV’s Sunil Prabhu also mentioned that the note sought to change the name “cryptocurrency” to “cryptoassets”. According to the reporter:
“They are not allowing any Bitcoin or any kind of crypto as a virtual currency being accepted. As a legal tender will not be accepted. That is no clear no. I think that is what even the Prime Minister in his deliberations at the meeting made absolutely clear to ensure that does not take place.”
The above echoes a previous statement made by India’s Finance Minister Nirmala Sitharaman, who said that the government does not plan to recognize Bitcoin as a currency.
Prabhu also said that Indians who hold BTC and other cryptocurrencies will have to declare their holdings and also keep them on regulated local crypto exchanges. The cabinet note further revealed cryptocurrency businesses will be brought under the regulatory ambit of the Securities and Exchange Board of India (SEBI),the countries securities and commodity regulator.
According to the NDTV reporter, investors will be given a time frame, which was not yet started, to declare their crypto assets. This measure was done to curb money laundering and terrorist financing.
“A cut-off date will be prescribed for those having crypto assets to declare the same and bring under the crypto exchange platforms – which will be regulated by the market regulator.”
Digital Rupee Plans Put on Hold
An earlier report in March stated that Indian private and public firms would be required to declare details of their cryptocurrency activities during the financial year. The NDTV reporter also mentioned that exchanges who violate regulations will be made to pay between ₹ 5 crores ($665,000) and ₹ 20 crores ($2.6 million) or face a jail term of up to one and a half years.
Meanwhile, the proposed central bank digital currency (CBDC) by the Reserve Bank of India (RBI) will be on hold, while the government’s immediate focus will be on crypto. Earlier in November, the RBI announced that it was considering a digital rupee pilot in 2022.
The latest development seems favorable for the cryptocurrency community in India, which has been worried that the government was going to issue a blanket ban on the industry.
Commenting on the government’s move, Nischal Shetty, founder and CEO of Indian crypto exchange, WazirX, said:
“It’s good to hear that India plans to regulate crypto. Regulation of crypto is a complicated subject. But we’ll not be able to solve it until we start talking about it. Fortunately, entire India is now talking about Crypto.”
