The Indian government is considering putting together a new panel of experts to discuss cryptocurrency regulations in India.
The committee headed by former finance secretary Subhash Garg in 2019 advocated for a total ban on cryptocurrencies. The purpose of the new committee would be to explore the use of blockchain technology and different ways of regulating cryptocurrencies.
For instance, appraising them as digital assets instead of a currency. The committee could also consider ways to operationalize the Reserve Bank of India’s (RBI) potential digital rupee.
India’s Ministry of Finance has been keeping tabs on the growing volume of cryptocurrency trading in India. Members of the ministry have also been talking to stakeholders on potential supervisory risks. For instance, Minister of State for Finance and Corporate Affairs, Anurag Thakur met with members of the crypto and banking industries. Thakur could be among the roughly dozen members of the new committee.
Amid the massive growth in volume on crypto exchanges, a team will also brief Finance Minister Nirmala Sitharaman around ongoing developments in the cryptocurrency space. In recent months, both Sitharaman and Thakur said publicly that the government should take a “calibrated” approach to regulating cryptocurrencies.
Current state of crypto regulations
The future of India’s cryptocurrency situation will be determined by the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. India’s Parliament had scheduled the legislation for its budget session in March, but got deferred for reasons not made public.
The bill’s authors composed the draft based on the recommendation of the previous Garg committee. Many expect that it will not only criminalize trading but also holding of cryptocurrency assets. This could be devastating to cryptocurrency investors in the country, who number around 10 million, according to industry estimates.
RBI had previously banned trading cryptocurrencies, in 2018. However, India’s Supreme Court overturned the diktat thanks to pressure from crypto entrepreneurs and technology and internet industry association IAMAI. A similar organization has been actively working to prevent another such prohibition. To their dismay, RBI has recently been informally requesting that lenders cut ties with crypto exchanges and traders.