India will soon have its own rules on bitcoin. The responsibilities of various regulators have been determined, a high-ranking official revealed. Relevant institutions are currently finalizing a comprehensive government policy on cryptocurrencies. Representatives of the Indian crypto community, meanwhile, have quashed fears of an imminent ban.
Crypto Policy Being Framed
The roles of various regulators in regards to cryptocurrencies have been decided already, the Chairman of India’s Securities and Exchange Board told reporters on Saturday. Amid continuing volatility on the markets and growing concerns about investors’ protection, Ajay Tyagi said the expected regulations should be out soon, the New Indian Express reported. He declined to provide further details, insisting officials would do that after the comprehensive government policy is finalized and announced.
Tyagi’s comments come after Finance Minister Arun Jaitley presented Budget 2018 this month. While explaining its key policies, Jaitley reiterated a previously stated position: Cryptocurrency is not recognized as legal tender in India and the government “will take all measures to eliminate“ its use in financing illegitimate activities. Indian authorities will instead encourage blockchain technology in payment systems, he said in his budget speech on February 1.
SEBI has asked the Department of Economic Affairs (DEA) to call a meeting on regulation matters on the next day, the Board’s chairman revealed. Ajay Tyagi was obviously referring to the panel set up to propose a regulatory framework after examining cryptocurrencies and their implications. “We have actually decided which regulator will do what and the committee should come out with the regulations very quickly”, he added. Tyagi promised his agency “will fully contribute to this” objective and insisted, “We want a policy to be framed first”.
Back in December the Finance Ministry announced it was creating a special panel to follow developments, including the volume of bitcoin related trade, and help speed up the process of adopting crypto regulation. Representatives of DEA, the Reserve Bank of India, and the Income Tax Department were invited to join the committee.
Suspense in India, but no Fear
According to previous media reports, new regulations were expected by the end of March. They are likely to involve anti-money laundering procedures and measures to prevent tax evasion. Suspecting dubious transactions, authorities have targeted cryptocurrency exchanges in the country and banks have suspended some of their accounts. More recently, India’s Income Tax Department announced it had issued notices to 100,000 cryptocurrency investors after monitoring the operations of leading trading platforms.
The Indian crypto community expected more clarity from Budget 2018 in regards to taxation of cryptocurrency incomes, profits and transactions. Mining and trading companies have also asked for clear policy guidelines from the government. Minister Jaitley’s reaffirmed position, however, did not answer many of the outstanding questions. Some see an imminent threat of an outright ban of bitcoin in his vow to “eliminate” cryptocurrencies. Others point out that he actually meant their use for illicit purposes.
Ajeet Khurana, head of India’s Blockchain and Cryptocurrency Committee (BACC) recently said he was happy that cryptos were mentioned in the state budget. “Having the finance minister say that cryptocurrency is not legal tender is perfectly logical. Every nation, barring Japan, has taken this stance. It doesn’t mean crypto trading is illegal, but that it comes with its own risks like any other investment asset in the market”, Khurana explained, quoted by Forbes. “There are multiple dimensions to bitcoin – technology, security, privacy. It is important to be aware of every aspect, to understand bitcoin better and make informed decisions while trading,” Khurana added.
Sandeep Goenka, cofounder of one of the biggest crypto exchanges in India, Zebpay, believes that the current government is open-minded and says this is a welcome change for those developing revolutionary technology. “The ideal way to strengthen the system is by using approved banking channels to onboard new customers and legitimize bitcoin trading”, he stated. Goenka also noted that the major exchanges in country are already implementing such measures and they should be a standard practice.
In the absence of official statistics, there have been several attempts to gauge the Indian crypto market. Ajeet Khurana says there are at least five million active traders in India that use existing regulated banking channels. One in every 10 bitcoin transactions in the world takes place in India, according to Constantin Papadimitriou, president of Pundi X. The Indonesian company conducted a survey in six countries, which discovered Indians were quite optimistic about the future of cryptocurrencies. The Indian branch of the job site Indeed claimed in a report that as of September last year there were 1.5 million wallet users in India. The number of crypto-related job postings on its platform has increased by 290 percent in just six months.
The Indian crypto sector definitely looks “too big to fail” now. Both the government in Delhi and the Indian crypto community seem to realize that fact. That, surely, is the main takeaway from all this.
How far will authorities in India go with establishing new regulations on Bitcoin? Tell us in the comments section below.
Images courtesy of Shutterstock.
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