A report published by the Economic Times states that the government of India may form a new panel of experts to study the possibility of regulating cryptocurrency in the country. The new committee could be tasked to explore the use of blockchain for technological advancement and suggest ways to regulate cryptos as digital assets instead of a digital currency.
If there is substance to the news, it will be the opposite of the previous stance of the Indian government. The previous panel formed by the Indian government to submit a report on cryptocurrencies took a tough stance on the crypto space. The panel recommended banning the use of cryptocurrencies in India.
Formation of a New Panel Committee
The new committee will study the way cryptocurrencies can be regulated in the country. Many in the government, especially the Ministry of Finance, have a prevailing view that the recommendations made by a committee on cryptocurrencies headed by former finance secretary Subhash Garg in 2019 had become outdated. They believe that a ban is not a solution, and instead, some latest ideas and suggestions are needed regarding regulating the use of cryptocurrencies in the country. The new committee may work in tandem with the Reserve Bank of India to explore the use of blockchain. The study will focus on finding ways to regulating cryptocurrencies as digital assets instead of digital currencies.
Considering the growing demand for cryptocurrencies in India, Anurag Thakur, the Minister of State for Finance and Corporate Affairs had already discussed the matter with members from the crypto and banking industry forums. He is also likely to join the new committee on cryptocurrencies. It is a welcome move as the involvement of high-ranking officials in an official committee on cryptocurrency signals the importance the government is giving to the crypto industry.
A Calibrated Approach in Regulating Cryptocurrencies in India
The crypto community was relieved after Anurag Thakur and Finance minister Nirmala Sitharaman stated that the central government would take a calibrated approach towards cryptocurrencies. It means that the central government is not considering an outright ban on their use in India.
Nirmala Sitharaman had said: “The world is moving fast with technology. We want to make sure there is a window available for all kinds of experiments that will have to take place in the crypto world. Thus, every movement has to be taken in a much-calibrated position.”
But the barrage of news about the ban on cryptocurrencies in India was putting pressure on the crypto traders and companies offering crypto services in the country. After a long time, some good news about cryptocurrencies is in the media, reading which crypto users and industry players must have breathed a sigh of relief.
India’s tryst with cryptocurrencies began with a bang in 2013 after the launch of cryptocurrency exchanges in the country. The Indian crypto industry was among the fastest-growing globally until RBI directed the financial institutions to stop serving crypto exchanges in 2018. Later, in 2020, the Supreme Court had revoked an RBI ban on payments related to cryptocurrencies in India. With the Supreme Court of India overturning RBI’s ban, the crypto industry started gaining traction again.
But a new setback came in 2021 with a draft bill aiming at criminalizing mining, holding, buying, selling cryptocurrencies in India. The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 were to be taken up for discussions in the Budget session of Parliament in March 2021. It was, however, delayed, and the reason for the delay was not disclosed. The proposed legislation will be presented in the upcoming monsoon session of the parliament. The draft bill is on similar lines to Garg committee recommendations.
The Stakes are High
As per Nischal Shetty, the WazirX CEO, the current number of crypto users in India stands at around seven million, who collectively hold almost $1 billion worth of cryptocurrencies. It proves there is a huge demand for cryptocurrencies in India. Thus, banning cryptocurrencies will have a long-term negative impact on India’s role in the global crypto scene.
The growth in the volume of crypto transactions in India has been such that experts believe that India will soon become the top five crypto markets globally, in line with the other emerging markets like Nigeria. What’s even more surprising for many is that even with the looming ban, the retail crypto trade has grown rapidly in India. It may have equally stumped the government officials, which may have led to a decision to form a new committee on cryptocurrencies.
The Economic Times report also disclosed that the Finance Minister of India, Nirmala Sitharaman, will receive a detailed brief about ongoing developments in the cryptocurrency space from her team later this month. However, these discussions are at the initial stages, with no formal resolution on the table yet. The Indian crypto ecosystem is eagerly awaiting the final decision on cryptocurrencies in India.
If the Indian government is truly planning to set up a new committee on cryptocurrencies, it is really good news for the Indian crypto industry. If India decides to regulate cryptocurrencies, it will join the United States, Singapore, Iran, and Germany in the list of countries regulating crypto.