- The Reserve Bank of India Draft regarding Framework for regulatory sandbox has excluded cryptocurrencies
- Fintech lobbyist organisation Nasscom is concerned about the lack of regulations regarding cryptocurrencies in India
- The regulatory body has asked concerned parties to give a feedback regarding the draft
- Indians still managing to trade crypto illegally even after all the bans imposed
India has been highly critical of Cryptocurrencies since 2018. Even after 1.5 years of setting up discreet committees that were instated to study the various use cases of cryptocurrencies and regulate the possession of crypto assets the government still wants to ban all cryptocurrencies and crypto assets in India.
Over the past years, cryptocurrencies have become one of the best and most popular investments for any trader because of their high volatility and profit potential. India started off on the right track with various exchanges setting up shop in India and millions of people flocking in. The Indian government, however, is lagging behind in terms of regulations by a fair margin.
The Indian government doesn’t care for cryptocurrencies
The Reserve Bank of India released a draft on April 18th named ‘Draft Enabling Framework for Regulatory Sandbox’, but had excluded cryptocurrencies, initial coin offerings, credit registry and other related sectors of the crypto industry.
Technology lobby groups like Nasscom and the booming tech industry in the country are concerned about the displeasure showed by the Indian government against cryptocurrencies. The countries government has however recognized the various use cases of blockchain technology but they have consistently denied regulating cryptocurrencies in a meaningful manner.
This has been an issue with plenty of tech firms in the country. Despite the aforementioned fact, it must be taken into notice that the Reserve Bank of India, which is a regulatory body of the country, has asked for feedback regarding the sandbox document from various concerned parties by the 8th of May.
Various fintech firms like Nasscom, the tech lobby group, accepted this offer. The interesting fact however is that the draft mentioned distributed ledger technology (DLT), which is a clear indication that the government wants to weed out some of the basic properties of cryptocurrencies and build something of their own from scratch.
Fintech firms want crypto in the sandbox
As reported earlier by the blockchain reporter, the Indian Interdepartmental committee set up under Subhash Chandra Garg in December 2017 has drafted a bill called the “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019.” The report stated that various government departments like the Department of Economic Affairs (DEA), Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs (CBIC) and the Investor Education and Protection Fund Authority (IEPFA) have already agreed to the idea of a complete ban on the “Sale, purchase and issuance of all types of cryptocurrency.” This in fact sheds further light on the matter that India will not tolerate any foreign cryptocurrency firms. After the report was published, Nasscom stated:
“Since crypto coins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox.”
The IT body further added that the sandbox is still foggy on the matter on where it stands in terms of ICOs, crypto trading and cryptocurrencies in general. The Payments Council of India (PCI), the payments industry lobby of India thinks that, digital assets of the likes of cryptocurrencies shouldn’t be excluded from such an important draft. Naveen Surya, chairman emeritus of PCI, said:
“The boundaries can’t be defined right away. The discussion has been on how an open framework can be created instead of a subset of existing laws, because then we wouldn’t be achieving the innovation objective.”
Incrypt Blockchain said it had submitted a report to the regulator on a blockchain-specific sandbox, which included specifics on policies and procedures. Nitin Sharma, founder of Incrypt Blockchain stated:
“Our research suggested that by restricting access to certain qualified digital asset startups, India could allow experimentation without worrying about any significant risks.”
Indians have not given up
Last year the Reserve Bank of India passed a circular that forced banks that are conducting business on Indian grounds, to stop dealing with firms that provide services related to cryptocurrencies. Many exchanges shut down or moved business elsewhere after this. So there were early signs that the Indian government wasn’t too keen on implementing the uses of cryptocurrencies even though there were speculations of the government developing their own cryptocurrency called the Laxmi coin.
The Indian people however did not give up as soon after the ban some exchanges like WazirX started a peer to peer trading system that lets Indian crypto enthusiasts to still trade cryptocurrencies without the risk of breaking any laws. Until any further news it is hard to determine which way India is looking at regarding the cryptocurrency and blockchain industry.