The Indian government has been progressing on cryptocurrency regulation. A recent report from the Ministry of Finance confirms some recommendations. Meanwhile, local media reported Friday that a draft bill on the regulatory framework for cryptocurrencies is being circulated among relevant government departments.
Ministry of Finance’s Confirmation
The Ministry of Finance recently published a summary report of the government’s activities in 2018. “An inter-ministerial committee under the chairmanship of Secretary, Department of Economic Affairs with representatives from concerned departments has been constituted for considering all aspects related to virtual currencies and crypto assets,” the document begins to explain.
The Indian government was supposed to submit a report containing the legal framework for cryptocurrency to the supreme court in March but the court adjourned without addressing the matter. The next hearing date is July 23 and the community expects this matter to be addressed at that time. The Ministry of Finance’s report reads:
Various options for treating virtual currencies and crypto assets including banning/regulating are being examined by the committee.
India Working With FATF
The report also reveals that India’s Department of Revenue has been working with the Financial Action Task Force (FATF) on various aspects including cryptocurrency. India is a member of the FATF, an international body which sets standards and promotes the implementation of legal, regulatory and operational measures for combating money laundering and terrorist financing globally.
The Department of Economic Affairs used to work with the FATF but the work was transferred to the Department of Revenue per Gazette Notification dated Nov. 9, 2017, the Finance Ministry detailed, noting:
Department of Revenue has been actively involved in the working papers being developed by the FATF on various issues (such as virtual currency, proliferation financing among) which will act as guidance for the member countries.
The G20 countries, including India, have reaffirmed their support for the FATF as “the global anti-money laundering, counter terrorist financing, and proliferation financing standard-setting body,” according to the FAFT report submitted to the G20 this month. The G20 also asked the FATF to clarify how its standards apply to virtual asset activities. Among other recommendations, the FATF replied:
Jurisdictions should apply a risk-based approach to virtual assets, virtual asset financial activities, and virtual asset service providers.
The FATF further stated that it will update the “Risk-based Approach Guidance on Virtual Currencies” by June for the G20 summit. This approach will assist “jurisdictions and the private sector, in implementing a risk-based approach to regulating virtual asset service providers, including their supervision and monitoring,” the FATF wrote.
Rumor of a Ban Recommendation
Local media reported Friday that the Indian government is in the process of discussing a draft bill on cryptocurrency. The Economic Times claims to have reviewed the minutes of a meeting of the government committee which includes representatives of the Department of Economic Affairs, the Central Board of Direct Taxes, the Central Board of Indirect Taxes and Customs, and the Investor Education and Protection Fund Authority.
According to the publication, the minutes showed that the ministries were “of the view that already there is a lot of delay in taking action against cryptocurrency. There is an urgent need to ban [the] sale, purchase and issuance of cryptocurrency.”
An unnamed government official claiming to know the details told the news outlet that the draft bill entitled “Banning of Cryptocurrencies and Regulation of Official Digital Currencies Bill 2019” has been circulated to relevant government departments for discussion. The publication, however, did not explain the “Regulation of Official Digital Currencies” part. In addition to this being a draft bill and information was based on anonymous sources, the news outlet emphasized that based on the feedback:
A final law will be proposed to the next government that takes charge after elections at the end of May.
This is also not the first time the media have reported that the Indian government is considering banning cryptocurrency based on anonymous sources. In December last year, Cnbc TV18 reported on a ban recommendation. However, another media outlet reported soon afterward that there was also a recommendation to legalize cryptocurrency with strong riders, leaving the public confused about what the recommendations actually were.
What crypto regulation do you think the Indian government will finally implement? Let us know in the comments section below.
Images courtesy of Shutterstock and India’s Ministry of Finance.