India On Course To Clarify Cryptocurrency Stance After Ban

Uncertainty has crippled India cryptocurrency sector for months. However not anymore.  A finance ministry panel set up late last year to deliberate on the regulation of the industry could be ready with a draft report. Fillings in the Supreme Court indicate in that the panel could present a draft report as early as next month.

India’s Cryptocurrency Ban

India’s cryptocurrency landscape has struggled in recent months. Mid this year the country’s central bank ordered all banks and financials banks to desist from-facilitating cryptocurrency activities.  Cryptocurrency exchanges, later on, complained to the Supreme Court accusing the government of chocking the sector.

The finance ministry panel could provide a reprieve depending on the kind of report it comes up with next month.  The panel’s core responsibility was to formulate norms that would govern virtual currencies.

Subhash Chandra Garg, a top civil servant, heads the panel. The panel also includes RBI deputy governor BP Kanungo and Ajay Tyagi who is the chairman of the Securities and Exchange Board of India.

“[…]…urgently, serious efforts are going on for preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology in (the) financial system and framework for digital currency in India.  The draft report and bill will be circulated to members of IMC (inter-ministerial committee),” a statement in a government affidavit in the Supreme Court.

Cryptocurrency Regulation

Subhash economic panel is not the first one to look into India’s cryptocurrency landscape.  In March of last year, the government did constitute a task force to look into the framework of regulating cryptocurrencies.  The panel did recommend insulation of investors from the risks of trading Bitcoin.

Despite being an economic powerhouse, India has instituted tough measures that have significantly crippled cryptocurrency operations.  The Reserve Bank of India has always insisted that cryptocurrencies are not in any way a means of legal tender. In April, the central bank asked all lenders to terminate any business relationships with cryptocurrency exchanges as part of a ban on virtual coins.