The much-awaited Indian cryptocurrency regulations may take some more time and will likely be announced by the end of the year. As the panel set in December 2017, to evaluate the treatment for blockchain and cryptocurrencies separately, needs more time.
Narendra Modi government and the Reserve Bank of India (RBI) have shown an inclination towards Blockchain adoption, but both remain unconvinced towards cryptocurrencies. The finance ministry panel led by Subhash Chandra Garg, secretary in the department of economic affairs was expected to submit a proposal by July. According to a senior government official who requests anonymity:
“There are lots of issues that need understanding and lots of studying needs to be done.”
The panel’s key issue if to work out a regulation that can enable the use of blockchain independently. The blockchain is a digitized and decentralized public ledger for all cryptocurrency transactions. It can be adapted as a bookkeeping platform that is owned by nobody but can be accessed by anybody on the internet if the financial application is removed. The official further explained:
“Blockchain is an interesting thing. We definitely want to milk it effectively for financial transactions. So all officials are really trying hard to understand how to separately use blockchain, without cryptocurrency. And understanding a new software takes time.”
To help the government understand the dynamics better, representatives of India’s cryptocurrency community have readily chips in. Ajeet Khurana, former head of the Blockchain and Cryptocurrency Committee, a lobby of bitcoin players in India said:
“In fact, we had one meeting specifically on this topic. A public blockchain needs to have a token and you can’t have it by excluding cryptocurrencies. Moreover, a public blockchain is analogues to the internet and no one can control it.”
While a lot of discussions has been going back and forth, excluding crypto seems to be problematic. It is further explained by Shubham Yadav, co-founder of Coindelta, a Pune-based cryptocurrency exchange:
“If a common man is involved in a blockchain that can be used to mine or validate a particular transaction then it takes resources. The investors are then incentivised by paying in cryptocurrencies, so if these digital coins are removed from the equation then it doesn’t make sense.”
In April 2017, a panel comprising officials from the finance ministry, the RBI, and India’s market regulator, the Securities and Exchanges Board of India (SEBI) was set to keenly study the cryptocurrency ecosystem. As of now, this group recommends slowly choking the industry to safeguard investors primarily.
Another panel led by Garg was appointed in December 2017, which suggests treating cryptocurrencies as a commodity, instead of banning them outright, A government official stated in an interview with Quartz last month.
“The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at.”
Earlier this year, RBI strictly prohibited Cryptocurrency exchanges pushing the idea of involving them to a corner. Several exchanges have challenged the RBI decision to ask banks to wind up all business relationship with them and investors in supreme court. The hearing for the same has been set for Sept. 11.
Read more: Tax On Cryptocurrencies Like Bitcoin In India
Source: Quartz India
Arshmeet Hora
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