Indian Government Looking For Options To Regulate Cryptocurrencies

In new developments in the Indian crypto space, the government is looking to step in on the regulation of cryptocurrencies in the country. This follows the recent lift on the total ban of virtual assets by the Supreme Court which termed the ban by the central bank, Reserve Bank of India, as “unconstitutional”.

However, regulation of the industry does not mean a free pass for crypto to be payment channels or legal tender, a government official familiar with the matter said.

India’s government weighs in on crypto

According to a post on Bloomberg, India’s government is considering whether to give the RBI power to regulate virtual assets in the country. Currently, the government is deliberating on the issue with the central bank with a framework set to be put in place soon.

Sources familiar with the development said the government may not permit the use of crypto in payment systems and also not accepted as a legal tender. While the regulation discussion is just at the starting stage, crypto exchanges will be recognized and regulated by the Securities and Exchange Board of India if the framework comes to fruition.

However, the government will need to await the apex court’s decision on cryptocurrencies in a case set to be heard on April 27^th.

A raising fight for crypto in India

Over the past few years, the cryptocurrency space in India has faced a number of challenges but got one of its breakthrough moments earlier this year. In 2017, the Supreme Court decided to jointly hear a case pertaining to cryptocurrency regulation and another on the virtual assets ban in the country. However, in mid-2018, the central bank imposed tough laws on cryptocurrencies, banning the use and trading of these assets –setting a punishment of over 10 years in prison if caught.

However, earlier this month a group of cryptocurrency exchanges headed to the apex court challenging the ban. They won. The court decided that the move by RBI was unconstitutional stating:

“The business of dealing in these currencies should be treated as a legitimate trade that’s protected by the fundamental right to carry on any occupation, trade or business under Article 19(1)(g) of the Constitution of India.”

Furthermore, the central bank’s directive of banning banks from providing services to cryptocurrency businesses is also being challenged in court.

A cleaner crypto market in India?

The government is moving towards regulation in a bid to stop all the under-dealings on cryptocurrencies and virtual assets. According to another source, the complete ban of cryptocurrencies in India contributed to more illegal use of cryptocurrencies as users found ways to bypass the central bank ruling.

With a bill drafted on the regulation of cryptocurrencies, laws on the trading of crypto will streamline the industry making it easier for the government to identify and follow those using these assets for illegal purposes.