After a period of uncertainty orchestrated by the Indian government’s deliberation, authorities have finally declared their intention to initiate a legal framework of banning the use of “private” cryptocurrencies. At a meeting of the Financial Stability and Development Council (FSDC) chaired by India’s Finance Minister Arun Jaitley, the issue of cryptocurrencies arose.
According to a press release issued by the Press Information Bureau (PIB), the working group “deliberated on the issues and challenges of Crypto Assets/Currency.”
The full excerpt of the press reads as below:
“The Council also deliberated on the issues and challenges of Crypto Assets/Currency and was briefed about the deliberations in the High-level Committee chaired by the Secretary (Economic Affairs) to devise an appropriate legal framework to ban use of private cryptocurrencies in India and encouraging the use of Distributed Ledge Technology, as announced in the Budget 2018-19.”
Surprisingly, the intergovernmental committee that was established to study and propose a legal framework for cryptocurrencies has instead recommended a ban on their use in India.
The meeting was attended by banking sector representatives as well as their market regulator. As per the statement issued by the PIB, Subhash Chandra Garg who heads the panel on cryptocurrencies was also at the meeting. The Reserve Bank of India (RBI) was also represented by its BP Kanungo, its deputy governor.
The panel was established in Dec. 2017 and was tasked with enacting rules to regulate cryptocurrencies. The recommendations of the panel were to be submitted in July 2018. However, they delayed in submitting the report.
What does “Use” Imply?
Notably, “use” in the press release could imply that transacting, buying, selling, or conversion to rupees is to be legally banned. The interpretation is shared in a tweet by Crypto Kanoon, a leading crypto regulatory analysis and awareness platform based in India.
Is Inter-disciplinary Committee going to recommend the legal framework to ban Crypto in India?
Mr. SC Garg, Secy. Deptt. of Economic Affairs briefs the FSDC Council on Crypto currencies in its 19th meeting yesterday. #regulation
Watch this video https://t.co/WsRiloM5P3
— Crypto Kanoon (@cryptokanoon) October 31, 2018
It is worth mentioning that there is no ban on the trade of cryptocurrencies in India. However, the RBI has consistently discouraged their use and thereby stopping all trade and exchanges. The situation was so serious that Zebpay, one of the largest cryptocurrency exchange, had to close its operation in India
On Oct. 25, 2018, The Indian Supreme court directed the central government to articulate its position on cryptocurrency within two weeks. This directive arose during a hearing in which cryptocurrency exchanges challenged the April 2018 circular targeting their operations. The circular prohibited Indian banks from dealing with individuals and businesses engaged in cryptocurrencies.