Last month, in an interview to a television channel ET Now, Subhash Chandra Garg, secretary in the department of economic affairs and head of the cryptocurrency panel, said that government officials are working to draft cryptocurrency regulations, which could arrive by July 15, tentatively. Just when everyone is looking forward to India’s stand on virtual digital currencies, the latest report suggests that India is not seeking to ban cryptocurrencies but instead treat them as commodities.
Recently, a senior government official with anonymous identity told Quartz that cryptocurrencies are, most likely are not to be banned in India. Instead, the finance ministry panel set to study them might treat them as commodities. He said:
“I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at.”
One of the most critical concerns of the cryptocurrency panel is to keep a tab on the illicit activities like money laundering and terror financing taking place in the crypto market. The official said:
“Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this (cryptocurrency trading) any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.”
A former RBI Deputy governor, R Gandhi expressed his view saying that treating digital currencies as commodities instead of real money will help the officials to solve this matter easily. He previously said:
“If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
There’s a lot of growing uncertainty currently in India’s cryptocurrency market. In April 2018, the Reserve Bank of India (RBI) issued a circular asking all the registered banking institutions to cut their ties with local cryptocurrency exchanges. This was soon followed by a backlash from the investors and exchanges who took this matter to the Supreme Court. The Supreme Court has currently issued a stay on the order of RBI, but things will become evident during the further hearing scheduled ahead this month.
Much recently, there have been multiple reports of cryptocurrency scams rocking India’s cryptocurrency market. An investigation into the matter is currently ongoing, but recently leads have also found some police officials being involved in this matter.
Well, most of the things are expected to get clear by this month. We hope India to adopt cryptocurrency regulations just as done by its Asian counterparts – Japan and South Korea and bring the market players under the existing KYC/AML laws of the banking sector.