The Indian government is seeking to pass legislation which would ban cryptocurrency trading in the country. A new bill is reportedly in discussion and will be on the floor of the Union Cabinet before it makes its way to the Parliament.
The bill comes at the same time when several national governments – Korea, Singapore, Switzerland, etc. – are planning to regulate cryptocurrency trading. After the 2016 Demonetization program by the Modi government, India experienced a rise in crypto trading. However, the honeymoon ended in 2018 when the Reserve Bank slapped a ban on cryptocurrency trading
Fortunately, it was revoked by the Apex Court in March 2020.
Blockchain: Yes; Cryptocurrency: No
Crypto trading has one of the fundamental backbone – Blockchain technology. New Delhi plans to use this groundbreaking tech in several other projects like managing land records, pharmaceutical drug production, and managing the Education sector. However, while the government’s think tank, the NITI Aayog, plans to implement blockchain tech into the federal machinery, it refuses to allow cryptocurrency trading.
Clearly, embracing blockchain while denying cryptocurrency trading is not only paradoxical but also counterintuitive. At best, it makes a joke of the decision to pass legislation against cryptocurrency trading. If the problem isn’t the underlying technology, then the 1.7m Indians trading in crypto assets would like to know what it is.
Many companies entering Indian markets today are planning to deal in cryptocurrency, and a ban can subdue them – both domestic and international.
The Indian financial watchdog SEBI was reportedly mulling over the idea of regulating Initial Coin Offerings (ICOs) in 2018, but there has been no prominent legislation about controlling cryptocurrencies in the country yet.
While the ban on crypto-trading can be issued legally, there still is the possibility of “regulating” the same. This regulatory framework can be made “to ensure adequate oversight of the government and the RBI over cryptocurrency businesses”, according to Sanjay Khan, Partner, Khaitan & Co, a New Delhi-based lawyer who advises related firms.