New Bill Leaves Market Puzzled: Will Crypto Ever Be Safe In India?

New Bill Leaves Market Puzzled: Will Crypto Ever Be Safe In India?
India’s Central Bank Says It Could Launch Pilot Tests For Its CBDC In Q1 2022
  • India continues to be indecisive on cryptocurrency regulation. 
  • Recent reports reveal that the country is considering providing crypto regulation rather than banning crypto. 
  • The proposed regulations still leave much to be desired. 

India, the second-most populous country in the world, has had a track record of being indecisive on cryptocurrency regulation. The government has been going back and forth on its stance on crypto, at one moment seeming to want to support it and in another moment thinking of giving the industry the boot.

This has been in contrast to their Asian counterpart China who has taken a solid stance on stamping out all activities connected to cryptocurrencies. Since reaching its decision, China has taken steps to implement it and have seen their efforts pay off in the form of highly reduced crypto adoption in the country. While China’s move will likely leave crypto-investors in the country dissatisfied, it does not leave them in doubt and uncertain as is seen in India.

Will India ever get regulatory certainty?

India has been the center of a lot of attention in the crypto-community for its continued indecision on the status of cryptocurrencies. The latest news coming out of the country is that there are plans to provide regulation for the industry. The country now also intends to recognize cryptocurrencies as assets and not currencies or legal tender, and will only be available through government-approved and regulated exchanges. This is according to a note cited by local news outlet NDTV which they say is being circulated by the Indian government.

The planned regulation will put “crypto-assets” under the purview of the Securities and Exchange Board of India (SEBI). It will also require crypto-investors to declare their holdings and transfer them to a state-regulated cryptocurrency exchange. Additionally, strict penalties will be imposed on those who default on the new proposal as outlined in the note. 

The new development is coming after it was recently reported that the parliament was planning to ban digital assets in the country to pave the way for the introduction of the country’s CBDC. The bill which was to be discussed during the country’s winter parliamentary session was to allow only certain well-established cryptocurrencies to be traded. 

India’s history of u-turns on crypto regulation 

Since as far back as 2013, the South Asian country has been contemplating where to stand on crypto. Between 2013 to 2017, the Reserve Bank of India issued a series of public warnings on crypto trading for Indian consumers. 

2018 saw the introduction of a draft bill that proposed to ban cryptocurrencies. This was quickly followed by a circular from the RBI that restricted banks from providing financial services to crypto exchanges. This rule was only revoked this year. But the central bank and top government officials continue to warn users, holders, and traders of virtual currencies about the potential financial, operational, legal, customer protection, and security-related risks they are exposing themselves to.

Crypto-investors and exchanges despite the adversity have continued to increase in both number and significance in the country. Earlier this year, major crypto exchanges carried out a campaign to push for favorable policies to be adopted called ‘India Wants Crypto’. Seeing the country talk of adopting regulation instead of banning and outlawing crypto has sparked hope that the country could soon see some stability in the crypto market.