Cryptocurrency In India: How Not To Regulate Crypto Sphere
In 2019, different governments aim to resolve the issue of how to regulate cryptocurrency. This applies even to those countries that haven't yet decided on their attitude towards the industry, such as India. Local authorities have repeatedly reminded the public of risks the use of cryptocurrency may involve. All that was happening during 2018 suggests that the destiny of the crypto sphere in India will likely be determined in the next few months. So today we'll talk about the history of the Indian government's passive resistance to cryptocurrency market regulation.
Residents of India took an active interest in the cryptocurrency industry in 2013, which has not gone unnoticed by the local financial regulator. Then on December 24, 2013, the Reserve Bank of India (RBI) issued the first press release, so-called Press Note 1. Several local cryptocurrency platforms turned off their activities after this publication, although it didn't contain any prohibitive measures. It was rather a warning issued to remind the public that cryptocurrency isn't a legal means of payment in the region and crypto transactions are risky. As it turned out later, this document determined the further course of the financial regulator for the next five years.
No prohibiting, no adoption
The first RBI warning didn't change public sentiments about the crypto industry. Indians actively used cryptocurrency, and the number of transactions was constantly increasing from 2013 to 2017. As a result, the central bank issued two more press releases:
- In Press Note 2 dated February 1, 2017, the financial regulator focused on the fact that it distinguishes the terms of cryptocurrency and blockchain. While the safety of digital assets is still up in the air, the introduction of blockchain technology is strongly welcomed.
- The Press Note 3 dated December 5, 2017 again warned that although digital currencies in India aren't outlawed, they still cannot be perceived as a legal means of payment. Also, the RBI recalled that cryptocurrency trading platforms in India are not regulated, which means their users are financially unprotected.
In February 2018, the Minister of Finance of India in his Budget Speech reaffirmed his solidarity with the regulator. It was expected that after that the RBI will take active actions, especially since the speech wasn't the only fact of the government's loyalty. As a result, an inter-disciplinary committee was created. Its main goal was to study how to regulate cryptocurrency through the example of the global legal field.
The further pace of development disappointed local crypto enthusiasts who were looking forward to the cryptocurrency market regulation and adoption in India. Instead, on April 6, the RBI issued a circular that prohibited all regulated financial institutions to deal with cryptocurrencies.
This decision had a negative society's response and was perceived by many as a total ban on cryptocurrency, which never came though. In order to avoid further uncertainty, interested parties sent three petitions to the Supreme Court of India. Their essence boils down to the need to determine the official status of cryptocurrencies in the country because they are still not regulated.
The trial ended on February 25, and the authorities were given four weeks to develop a cryptocurrency market regulation policy. Otherwise, the decision-making privilege is to be transferred to the RBI that may impose a total ban on cryptocurrency in the country.
The deadline ended on March 29, 2019, but instead of presenting a bill, the government requested the Supreme Court to postpone the hearing on the status of cryptocurrency in India. Taking into account how many times the final decision was adjourned, such an outcome was more than expected. Interestingly, in early March, a representative of the government proclaimed that the cryptocurrency regulation issue was at its final stage, but evidently, that's not entirely true. India's officials were granted another delay until July. This means we can hope that the country may meet cryptocurrency progress in the nearest future.