The Government of India is chalking out strict regulatory policies to legalize cryptocurrency as early as next month.
The Times They Are A-changin’
The Indian Government formed a panel in March 2017 to look into cryptocurrencies as an asset and address the issues surrounding it. This panel recommended a total ban on cryptocurrencies and went as far as terming cryptocurrencies illegal.
This ban was challenged in the Supreme Court last year, which resulted in the formation of an inter-ministerial committee by the Government of India. The New Indian Express reported that this government committee has already met twice for the matter. A report is very likely to be submitted to India’s Ministry of Finance as early as the next month.
The news provided a huge sense of relief to holders of Cryptocurrency in the country as legalization may provide the necessary impetus to the cryptocurrency market in India.
The Policies Under Consideration And The Team Behind
Despite the news of legalization spreading like wildfire, the inter-ministerial committee has advocated strict policies for regularization. According to a media statement, a source delivered the following message:
We have already had two meetings. There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalized with strong riders. Deliberations are on. We will have more clarity soon.
Various policies are being sought out after consultation with cryptocurrency exchange platforms and experts dealing in this field. The committee is also now in talks with the Law Ministry to understand the legal obligations.
The members of this inter-ministerial committee includes members from the Reserve Bank of India(RBI), the Ministry of Finance, the Ministry of Home Affairs, the Ministry of Electronics and Information Technology, the National Institution for Transforming India (NITI Aayog), the State Bank of India, the Central Board of Direct Taxes and Securities and Exchange Board of India(SEBI).
The Impact On The Market
As cryptocurrencies were deemed illegal, all financial institutions under regulations by RBI were prohibited by RBI to enter into any agreement with crypto-trading services. As a result, these financial institutions were unable to provide any services to the crypto-trading businesses. One of the sources gave a media statement referring to the RBI directive:
The curb on bank accounts has crippled our, and our customer’s, ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business
This wreaked havoc in the Indian market which caused a complete shutdown of many cryptocurrency businesses. One of the leading cryptocurrency exchange platforms, Zebpay, also had to shut down its operations in India last year due to this ban.
Uplifting the ban could result in significant improvements in the cryptocurrency market. One glaring example is Japan, where regularizing cryptocurrency has led to more than 3.5 million individuals actively using and trading cryptocurrency.
This is one of the multiple reports that have surfaced over the last few months, and it is pointing to strong possibilities of legalization.