- Cryptocurrencies are neither legal nor illegal
- The government and RBI has always expressed displeasure
- The committee set up to study cryptos favors regulation over banning
Cryptocurrencies to Finally get Some Legitimacy in India
Confusion reigns in India’s cryptocurrency ecosystem. However, that’s about to change as reports show the government’s interdisciplinary committee on cryptocurrencies is considering legalizing cryptos, clarifying their status, which is in a curious limbo—since they’re neither legal nor illegal in India.
A committee set up by the Narendra Modi government, which together with the country’s Central Bank, the Reserve Bank of India (RBI) had made it clear in the past they are uncomfortable with digital currencies, and has returned a positive verdict, according to a report in The New Indian Express.
As per the report, the committee has met twice, and the report is likely to be ready for submission in February 2019. A senior government official privy to the committee’s deliberation told the New Indian Express publication:
“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.”
The confusion in India’s cryptosphere started on November 30, 2017, when, amid the investor frenzy caused by the rising Bitcoin prices, Finance Minister Arun Jaitley said the government didn’t recognize cryptocurrencies as legal tender. The following month the government cautioned against investing in cryptos, claiming there was a risk of an investment bubble and that investors were likely to lose their money. In an official notification on December 29, 2017, the finance minister said:
“Consumers need to be alert and extremely cautious as to avoid getting trapped in such ponzi schemes […] through multiple notifications, the two parties (the government and the RBI) have notified the public time and again that Bitcoins will not be considered lawful or legal tender in India.”
In October 2018, the government said it was considering the “ban of use of private cryptocurrencies in India but in what brought in a ray of hope; government official submitted a counter-affidavit on November 19, 2018 in a case filed by cryptocurrency exchanges. The document, according to sources, said the authorities were still choosing between a ban and regulation.
“…several informal meetings have been held to develop a draft law to control/ban the use of crypto-currencies in India, promote use of blockchain technologies and also to examine (the) feasibility of official digital currencies in India.”
This information comes soon after the G20 countries took the bold step of agreeing to regulate cryptocurrencies to counter financial terrorism and money laundering, which is in line with the recommendations of the Financial Action Task Force. Ganesh Kumar and other Finance ministry officials privy to the G20 and FATF recommendations are likely to add value to the committee’s final report.