India – Cryptos May Be Legalized With Firm Rules In Place

Confusion prevails in the cryptocurrency ecosystem of India. This is about to change, however, as reports show that the interdisciplinary government committee on cryptocurrencies is considering legalizing cryptos, clarifying their status, which is in a curious limbo— because they are not legal or 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), has made it clear in the past that they are uncomfortable with digital currencies. However, the latest report indicates that the committee has delivered a positive opinion.

According to the report, the committee met twice and the report is expected to be available in February 2019. The following was said by a senior government official in the deliberation of the committee.

“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 began on 30 November 2017, when Finance Minister Arun Jaitley said that the government did not recognize cryptocurrencies as a legal tender in the midst of the investor frenzy caused by rising Bitcoin prices. The Government warned against investing the following month.

“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 that it considered “the ban on the use of private cryptocurrencies in India, but in what led to a ray of hope; on 19 November 2018, the government official submitted a counter-affidavit in a case filed by cryptocurrency exchanges.” According to sources, the document said that the authorities still chose between a ban and a 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 have taken the audacious step of agreeing to regulate cryptocurrencies to combat financial terrorism and money laundering in line with the Financial Action Task Force’s recommendations. Ganesh Kumar and other G20 ministry officials and FATF recommendations are likely to add value to the final report of the committee.