India’s Cryptocurrency Regulation Framework Could Be Released By this September

During the latest Supreme Court Hearing last Friday, India’s Central Bank -  The Reserve Bank of India (RBI) demonstrated the need of having a regulatory framework for the country’s domestic cryptocurrency market.

A few months back in April 2018, India’s central bank issued a circular asking all registered banking institutions to cut their association with the local cryptocurrency exchanges. Outraged by this move of the central bank, the local crypto community took this matter to court which is currently undergoing hearings seeking plea from both parties.

Last month itself, Subhash Chandra Garg, Secretary of the Department of Economic Affairs at the Ministry of Finance said that they were working along with the RBI on a regulatory framework which was expected to be unveiled during the last hearing, last Friday. However, the dates have now been pushed to September 11, and will supposedly be the final hearing reports local publication Financial Express.

The publications also reported that RBI special counsel Shyam Divan told a bench led by chief justice Dipak Misra and justices AM Khanwilkar and DY Chandrachudthe told Supreme Court that it is mandatory to regulate cryptocurrencies as it encourages “illegal transactions” and also impact the international flow of funds.

While talking to another local publication, The New Indian Express, an unnamed senior official from the Finance Ministry said: “The government will finally come up with detailed guidelines on cryptocurrency. The draft is ready and consultation is on with all the stakeholders, including market regulator SEBI, India’s central bank RBI and the Internet and Mobile Association of India (IAMAI) before coming up with the final paper. We expect it to be ready by September.”

The senior official also added that “Cryptocurrency is a new phenomenon and naturally, governments across the globe are struggling with it. Most of the officials have serious reservations against it, which all of us agree with. However, we want to arrive at a common conclusion. There must be an appropriate mechanism to regulate the same.”

There is no clarity on the fact that what regulatory measures could be introduced in the new framework coming September. However, a recent report from Quartz earlier this month quoted an anonymous government official saying: “I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. 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.”

Countries like South Korea having been seen taking some positive steps concerning crypto regulations. Additionally, the G20 in its last week report said that cryptocurrencies don’t pose a potential threat to the existing global economy currently.