Regulations for the Indian cryptocurrency market have been a long time coming. Now it seems that they will be in force by the end of this year.
The pending regulations are a result of uncertainties from the finance ministry panel on how to treat cryptocurrencies and blockchain separately. While the Reserve Bank of India (RBI) and the Narendra Modi government had expressed a favourable stance on adopting blockchain, less favourable feedback has been given when it comes to cryptocurrencies.
Missed proposal deadline
The purpose of the panel, which was formed by Department of Economic Affairs secretary Subhash Chandra Garg in late 2017, was to propose regulations on cryptocurrencies. Its proposal was supposed to have been submitted in July.
The main problem that the panel faces is if regulations are drawn up to independently promote the use of blockchain. The blockchain is a decentralized and digitized public ledger for all cryptocurrency transactions. If it becomes detached from financial application, the tool becomes a bookkeeping platform owned by nobody while being able to be accessed by anybody online. Representatives from the country’s crypto-community have held discussions with the government in a bid to help them gain a better understanding of the subject. Ajeet Khurana, who represents the former, said that the public blockchain requires a token and that that can’t be the case should cryptocurrencies be excluded.
Indian government in denial
The Modi government has been assessing the cryptocurrency ecosystem since April last year when it established a panel with officials from the Securities and Exchanges Board of India, the RBI, and the finance ministry. The group suggested gradually choking the industry, largely to protect investors.
Despite the Government's stance, it's hard to deny the importance of cryptocurrency in the current climate. Bitcoin has proved that it's here to stay after overcoming a shaky period when its detractors erroneously believed it was merely a fad. We've seen the emergence of other digital coins, such as ethereum and ripple prove their worth by being offered as an online payment method in a number of industries. In fact, when it comes to market cap, the ripple cryptocurrency is the fourth-largest cryptocurrency in the world. While it’s very different to bitcoin, it’s regarded as being in the same category of cryptocurrencies. Ripple works with all international currencies and its transfer fees are less than bitcoin. The digital coin has been around since 2012 when it was introduced as a settlement system for real-time transactions.
Cryptocurrencies a commodity
The Garg-run committee was appointed by the government in December of the same year and fought the idea of banning cryptocurrencies; rather, suggesting that it be treated as a commodity.
The country’s cryptocurrency ecosystem is already fighting a losing battle, however. The RBI clamped down on the exchanges earlier in the year when it asked banks to end any business relationships they had with it. The RBI has subsequently been challenged by a number of exchanges in the Supreme Court. A final hearing date has been set for September 11.