Government of India, central bank and SEC to discuss cryptocurrency regulatory framework

The Indian government is reportedly discussing the regulatory framework for cryptocurrencies with the Central Bank, the Reserve Bank of India (RBI) and the Indian Securities and Exchange Commission (SEBI). In addition, the Indian government is awaiting the outcome of another cryptocurrency case from the Supreme Court to make a final decision on cryptocurrency regulation.

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Indian government expected to finalize cryptocurrency regulatory decision after Supreme Court hearing

So far, the Indian government has been silent on plans to regulate or ban cryptocurrencies. Although a draft bill seeks to ban all cryptocurrencies except those issued by the state, Bloomberg reported on Friday that the government is currently discussing with the central bank the prospect of regulating cryptocurrencies. Journalist Nikonj Ohri quotes "people are aware of developments":

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"The government is weighing whether virtual currencies can be regulated by the Reserve Bank of India … the regulatory framework will be determined after discussions with the central bank."

According to reports, the Indian government is considering whether cryptocurrencies can be regulated by the Reserve Bank of India. However, the central bank is concerned that the anonymous nature of cryptocurrencies may pose a threat to India's banking system.

The publication states that the discussion is still in its infancy, but the framework may not allow the use of cryptocurrencies in the country's payment system, nor does it recognize them as legal tender.

Digital currencies can be approved by the Reserve Bank of India (RBI), and cryptocurrency exchanges can be recognized and regulated by the Securities and Exchange Board of India.

In addition, the Indian government is reportedly awaiting the outcome of another cryptocurrency case in the Supreme Court originally scheduled for April 27. The court is expected to hear two written petitions, one of which seeks to ban cryptocurrencies and declare them illegal, while the other seeks to regulate them. The petition was filed in 2017, but the hearing has been delayed until now.

The case is different from the Reserve Bank of India ban in March, which was ruled by the court. The March 4 ruling canceled the central bank's April 2018 circular, which banned regulated financial institutions from providing services to cryptocurrency businesses. . However, some banks continue to refuse to serve crypto businesses, including HDFC and Indusind Bank. The Reserve Bank of India has reportedly stated that they believe the anonymity of cryptocurrencies poses a threat to the national banking system and will therefore submit a request for review to the Supreme Court. The Central Bank of India must submit the petition by April 3. At the same time, as global investment began to pour into the field, the Indian Supreme Court's ruling boosted India's crypto industry.

India's Supreme Court is set to hear another cryptocurrency case next month. The case involves a written petition banning and regulating cryptocurrencies, including Bitcoin.

Is the Indian government changing its view on the ban on cryptocurrencies?

Since February last year, the Indian government has been reviewing the Ban on Cryptocurrencies and the Official Digital Currency Regulation Act of 2019. The bill is drafted by the Inter-Ministerial Committee (IMC), which studies various aspects of cryptocurrencies and advises the country. The committee is headed by former Finance Minister Subhash Chandra Garg. The Indian cryptocurrency community believes the bill is flawed and has been pushing the government to re-evaluate IMC recommendations. Since then, Garg has left government office. The bill was supposed to be introduced in Parliament last winter, but it didn't pass.

An official explained that a complete ban on the use of cryptocurrencies would not only be difficult to implement, but would also lead to underground cryptocurrency transactions. On the other hand, regulating them will allow the government to monitor their activities and thus prevent their use in illegal activities. Furthermore, the official asserted that even if most of the IMC's recommendations were accepted, the government still has the right to exempt certain cryptocurrencies and related activities, including use, holding, selling, trading and mining. The official said:

"Since the consideration of a total ban on cryptocurrencies, the change of personnel at senior institutional officials has also led to a change in previous positions."

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