For months, mixed signals have been coming from India regarding the legal position of cryptocurrency. In the American Congress, it was even stated that they are forbidden. But what about really?
A process has been going on for months between India’s central bank and the business world. On the one hand, a strict supervisor, on the other hand, a sector that requires room to innovate. The government is said to be “almost ready with a legal framework” in March. But the asset class is excluded from the newly proposed FinTech framework. And there were rumors of a potential ban and high penalties on the possession of crypto.
Government is working on rules
On July 8, the Indian Minister for Business Affairs answered three questions about cryptocurrency, namely:
- Is there a government proposal to ban cryptocurrency in India?
- If so, what are the details about that?
- Are there companies that now have permission to work with crypto?
The official answer is that “the government does not recognize cryptocurrency as legal tender”. And that nothing has been decided yet regarding the trade in cryptocurrency. To make that decision, a committee has been set up in which several ministries contribute. That committee “studies all aspects of cryptocurrency, including Bitcoin”.
There is no question of a ban (yet). “The committee is working on a framework for the regulation of cryptocurrency,” writes the minister. “Because there is no global standard for it yet, we are working with caution.”
However, the minister states that there has been a frequent warning from the government and the central bank (RBI) about “the dangers of cryptocurrency”. He also refers to the prohibition imposed on financial institutions by the RBI. They may not provide services that are related to cryptocurrency. Although there is no prohibition on cryptocurrency, the access routes to it are closely guarded.
No ban on crypto
On July 16, the Indian Finance Minister also came out with answers to questions about cryptocurrency. He was short and to the point: “No, there is no ban on cryptocurrency.” He also builds a bridge to the committee that is working on a new legal framework, saying that “because there are no rules yet, all agencies should rely as much as possible on existing laws”.
The court case will continue next week
Although the use of cryptocurrency is permitted, the business world is left with a net that is far too tight in their opinion. There is little room for maneuver to do business, and according to them, that stands in the way of innovation. The gap with the rest of the world is only increasing.
The lawsuit that should change that will continue next week. The next session of the Supreme Court is on 23 July. But there is only a small chance that something substantial will be achieved. As long as the law offers no scope, the question is whether the court can change the situation.