Crypto advocates in India are not going down without a fight, even though crypto skeptics seem to have finally turned the tide of debate in their favor. The crypto debate in the world’s second most populated country has been raging for several years with stern warnings from the nation’s Supreme Court to finalize proposals post haste.
The government’s inter-ministerial committee, the group tasked with completing a comprehensive proposal, released its draft a week ago – a total ban on all crypto related activities. Nasscom, India’s premier IT Trade Association with over 2,700 member companies, lambasted the proposed ban as “not the most constructive measure” and chastised the government to build “regulatory sandboxes” to encourage innovation.
The inter-ministerial committee has representatives from the Reserve Bank of India, the Ministry of Finance, the Ministry of Home Affairs, the Ministry of Electronics and Information Technology, the National Institution for Transforming India, the State Bank of India, the Central Board of Direct Taxes, and the Securities and Exchange Board of India. The Reserve Bank of India has always held the upper hand in these matters, having actually ordered banks in April of 2018 to have no contacts with crypto entities.
It appears that the RBI has maintained its control of the committee’s activities. The proposed ban read: “No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency in the territory of India.” It also bans the use of cryptos as “legal tender” in India, as well, but it keeps the door open for the possibility of a central bank digital currency. Violations would carry a ten-year jail sentence.
The chairman of the committee, Subhash Chandra Garg, issued this tweet:
Committee is very receptive and supportive of distributed ledger technologies and recommends its widespread use in delivering financial services. It also opens the door for a possible official digital rupee. Private crypto currencies are of no real value. Rightly banned.
The committee’s delays have forced several crypto exchanges to close, the reason for several pending cases before the Supreme Court, which had set July 23rd as the final hearing date for these cases. The court had already admonished government officials, nearly demanding a draft of new rules or else, but the day before the hearing date, the committee amazingly issued its proposal for a crypto ban.
Nasscom is not pleased:
Nasscom believes that the recent proposal of the inter-ministerial committee of the government to ban all cryptocurrencies barring those that are backed by the government, is not the most constructive measure. […] Instead, the government should work towards developing a risk-based framework to regulate and monitor cryptocurrencies and tokens.
The trade group took the high road and spoke to the benefits of and how “regulatory sandboxes” might work:
We should work towards creating a regulatory framework that will constantly monitor and prevent illegal activities. Regulating would allow the law enforcement agencies to be better equipped to understand these new technologies, enable them to gather intelligence on criminal developments and take enforcement actions.
Crypto advocates had been hopeful in January, when word had leaked from a committee insider that the discussions were more positive than had previously been perceived:
We have already had two meetings. There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalised with strong riders. Deliberations are on. We will have more clarity soon.
Delays ensued. Crypto exchanges have had to close their doors in the interim. The last company to shut down was Coinome in May of this year. Its last email to customers expressed regret:
India is currently going through uncertainty on crypto guidelines and regulations. The government of India has not yet taken a decision on the regulatory framework for crypto exchanges or wallets. Further, the Supreme Court is yet to act upon the public interest litigation (PIL) on (the) regulation of crypto assets.
Tim Draper, an American billionaire and venture capitalist, declared that the Bitcoin ban “will set India back 40 years”. Labeling the actions as backward and displaying a lack of toleration for the innovative progress, Draper could not resist the opportunity to ruffle a few feathers of the locals:
People will want to leave India to get to a country that is less backward. I suspect they will get out so they can live a better life.