Cryptocurrency regulations in India have been a source of uncertainty for the markets since the government’s unprecedented tirade against crypto that began this past April. However, it’s reported that the government is now likely to finalize some common sense regulatory measures starting in late 2018.
A finance ministry panel devoted to the issue has found that the main problem with cryptocurrency regulations is how to define and separate the blockchain from its cryptocurrency counterparts. The Indian government has taken a friendly stance towards blockchain technology, but is still slow to adopt similar opinions towards cryptocurrencies.
The finance ministry panel, which is operating under the department of economic affairs, was expected to release its proposal on cryptocurrency regulation in July. That proposal has since been delayed for an unforeseeable amount of time.
An unnamed government official working on the finance panel spoke to Quartz India, saying:
“Blockchain is an interesting thing. We definitely want to milk it effectively for financial transactions. So, all officials are really trying hard to understand how to separately use blockchain, without cryptocurrency…And understanding a new software takes time.”
The finance ministry has not yet responded to reports that cryptocurrency regulations will be finalized following further research on the topic.
India’s Complicated Relationship with Cryptocurrency
India began its battle against cryptocurrencies in April of 2018, when the Reserve Bank of India (RBI) isolated cryptocurrency exchanges by blacklisting them from financial institutions. This ban almost instantly dried up liquidity for India-based cryptocurrency exchanges, and officially began on July 5th.
The RBI made a statement at the time of the ban, saying in part:
“It has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling cryptocurrencies. Regulated entities which already provide such services shall exit the relationship within a specified time.”
After much protest from investors and businesses affected by the ban, there was another twist to the situation. This came after an anonymous government official who explained that the government viewed the ban as more of a temporary measure while the country developed industry regulations.
Last month, it was reported that a senior government official said:
“I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at.”
At this time, it seemed as though a governmental decision on the legalization of sports betting could have a positive impact on cryptocurrency regulations.
Following a long-prepared case advocating for the legalization of sports betting, the Indian law commission mentioned using cryptocurrency as an efficient way to track sports bets, saying, “gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, virtual currencies, etc.”
The final hearing for the case on the legalization of cryptocurrencies is scheduled for September 11th, although the ministry’s apparent indecisiveness could lead to delays in the hearing. Nevertheless, sources familiar with the internal ministry decisions are confident that regulations will be finalized later in 2018.
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