- The crypto space in India remains largely unregulated after the ban on cryptos was lifted
- India’s currently takes a yes to blockchain and no to crypto stance
- A law firm in India has submitted drafts to the government recommending regulatory changes for the industry
Statistics place India as one of the biggest crypto-centered countries. In December, India overtook China to become the largest trader of peer-to-peer Bitcoin trading.
India opened the year with a very significant announcement for the crypto industry. Unicas, a joint venture between Cashaa and the United Multistate launched the world’s first physical crypto banking branch in Jaipur, India, with plans for up to 100 branches in the future.
Regardless of the immense contribution from crypto projects in India, the country still lacks a clearly defined regulatory framework for the industry. What are we to expect from India’s regulators in 2021?
India’s Currency Stance on Crypto
In 2018, India’s Reserve Bank enacted the RBI Act of 1934 and the Payment Settlement Systems Act of 2007. As a result, there was a nationwide blanket ban on the use of cryptocurrencies and firms providing similar services.
It was not until March 2020, that the Supreme Court of India reviewed and subsequently overturned the ban on cryptos in the country. Although the government no longer considers the blanket ban on cryptocurrencies as not viable, there is still a lack of clarity over India’s stance on cryptocurrencies.
In India, although crypto exchanges are considered legal, cryptocurrencies are still not considered legal tender. Thus, making it difficult for the legal exchanges to fully operate.
On the Flipside
- In a move to prevent corruption, Russia has banned public officers from holding cryptocurrencies
- According to Russia’s Ministry of Labor officials of federal and local government bodies are prohibited from owning cryptocurrency
- If they have any holdings, they must dispose of them to continue serving in a public office
The Push for Regulatory Clarity in India
n India’s the government has taken a Yes to blockchain technology and No to cryptocurrencies. One of the reasons the Indian government moved to ban the use of cryptos in 2018 was because of their role in money laundering.
In December, a crypto scam came to light that was responsible for duping people of over $150 million. While such occurrences happen occasionally in the crypto space, crypto exchanges in India have come up with unique KYC guidelines to verify the identity of users and reduce the possibility of laundering money.
A law firm in India, Khaitan and Co., has sent its recommended regulatory drafts for changes that need to be made to the Foreign Exchange Management Act, 1999, to provide the crypto sector with a more favorable atmosphere.
In addition, Khaitan and Co. have advised the government to allow the SEBI to regulate crypto exchanges in the country. If this happens, then crypto exchanges will be considered at par with other stock exchanges and will increase the confidence investors have in cryptos.
Crypto enthusiasts pushed for the renouncement of the 2018 blanket ban on cryptocurrencies, although it took two years, the decision was finally overturned.
Now, there have been calls for regulatory clarity, amid a worldwide movement for regulations. In fact, there have been several claims that the federal cabinet is considering a cryptocurrency bill
With the 2021 Budget Session of India scheduled for February 1, in Union Budge, crypto advocates are hopeful there will be better regulations on the way. It will also be the first time a paperless budget will be delivered in India.