The Indian government is expected to issue detailed cryptocurrency guidelines by September, a senior official from the country’s Ministry of Finance reportedly said. Consultations with all stakeholders including the central bank have already begun. This announcement is independent of the supreme court’s hearing of petitions relating to crypto regulation in India.
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Regulation Expected by September
The Indian government has reportedly finished drafting the regulatory framework for cryptocurrencies. The New Indian Express wrote on Saturday that the government is “likely to issue guidelines on cryptocurrency by September.”
This news follows the statement last month by the country’s Economic Affairs Secretary, Subhash Garg, confirming that the draft law would be ready by mid-July.
Citing that stakeholders include the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Internet and Mobile Association of India (IAMAI), an unnamed senior official from the Ministry of Finance told the news outlet:
The draft is ready and consultation is on with all the stakeholders…before coming up with the final paper. We expect it to be ready by September.
“The ministry has constituted an interdisciplinary committee under the chairmanship of Special Secretary (Economic Affairs) to examine the regulatory framework regarding virtual currency,” the publication detailed. “SEBI and RBI have expressed some reservations regarding clauses in the initial draft.”
How Should Crypto be Regulated?
The unnamed senior official was quoted by the New Indian Express, “Cryptocurrency is a new phenomenon and naturally, governments across the globe are struggling with it.” He further detailed, “Most of the officials have serious reservations against it, which all of us agree with … we want to arrive at a common conclusion. There must be an appropriate mechanism to regulate the same.”
While the regulators have not confirmed how cryptocurrency will be regulated, Quartz reported that a senior government official familiar with the matter indicated it could be regulated as a commodity. “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,” the publication quoted him saying on July 11.
He explained that cryptocurrency “trade is not a criminal offence,” describing:
What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.
Supreme Court Hearing Also in September
The Supreme Court of India on July 20 set the final hearing date for all petitions relating to cryptocurrency regulations to September 11. The hearing is in response to the circular issued by RBI on April 6 banning banks and all financial institutions under its control from providing services to crypto companies.
Many industry participants have petitioned against the ban. The IAMAI successfully convinced the supreme court to hear its petition on July 3. However, the court did not grant a stay and the ban went into effect on July 5. Banks subsequently closed the accounts of most crypto exchanges.
The supreme court was supposed to hear all of the petitions relating to crypto on July 20. However, since some government bodies such as SEBI have not provided a response, the news outlet noted:
A three-judge bench headed by Chief Justice Dipak Misra acceded to the request made by the petitioners and the matter has been listed for final disposal on September 11.
At the hearing on Friday, the IAMAI was represented by Advocate Gopal Subramanium while Advocate Shyam Divan appeared for RBI. Divan “informed the court that allowing dealings in cryptocurrencies will encourage illegal transactions,” the publication conveyed, adding that he clarified the central bank’s policy is of “extreme caution.”
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