According to recent reports published in Moneycontrol, India’s leading business and investment related portal, the Indian government may look at amending existing laws that could make the holding of crypto assets, other than those not approved by the government, a punishable offense.
The government appointed committee working on broad contours of a regulatory framework
The Indian government has formed a committee which is headed by Subhash Chandra Garg, secretary, department of economic affairs, is working on and is likely to present its report by December, defining the broad contours of a regulatory framework for crypto assets and virtual currencies. The committee was formed by the Indian Government in last December and had appointed Garg to examine a framework for regulating cryptocurrencies.
Other members of the panel include Securities and Exchange Board of India chairman Ajay Tyagi and Reserve Bank of India (RBI) deputy governor BP Kanungo. The panel is in the last stages of deliberation and will come out with the government’s approach covering the entire spectrum. The government is of the view that unregulated crypto assets should not be allowed to move into the financial system. The Garg-panel is likely to recommend appropriate amendments in existing laws, defining the punitive measures for those found holding illegal crypto assets.
The government and the RBI’s biggest worry with cryptocurrency is to guarantee that unregulated crypto assets are not used as a means of the transaction for malicious activities evade taxes and strike deals outside the regulatory boundaries, including multi-level marketing (MLM) and Ponzi schemes.
The government is also awaiting the report of an RBI study on digital currencies. The central bank had set up an inter-departmental group in April to “provide guidance on the desirability and feasibility to introduce a central bank digital currency”. RBI had then said that rapid changes in the landscape of the payments industry along with factors such as the emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies.
Officials of another regulatory body, the Securities Exchange Board of India (SEBI), the capital markets watchdog, had also organized tours to Japan’s Financial Services Agency; the UK’s Financial Conduct Authority, and Swiss Financial Market Supervisory Authority,
Indian government view has also not been quite positive on cryptocurrencies. In his budget speech for 2018-19, finance minister Arun Jaitley had said that cryptocurrency was not legal tender in India, but hinted that the government was open to adopting the underlying technology, called blockchain, to bring in more efficiencies in India’s digital payment systems.
While cryptocurrency and its legality still hang on a cliff-hanger in India, a move like this will practically kill the budding innovation in the country. Hopefully, the appointed committee won’t unleash venom and hopefully support blockchain and cryptocurrency by properly regulating them