The government may set up a new crypto-regulation panel to recommend the ideal course for regulating crypto currencies, the Economic Times reported. The development comes when banks and payment companies are blocking crypto-exchange services to prevent exchanges from accepting new deposits and new investors.
Earlier, a committee of the Finance Ministry headed by former Secretary of Finance Mr. Subash Chandra Garg had recommended a complete ban on cryptocurrencies by 2019. He had further suggested that the government introduce criminal provisions against crypto-firms.
But Garg appears to have changed his views since then. He recently recommended that the government regulate the cryptocurrency market. “I don’t think we still have complete clarity about how cryptocurrencies can be controlled… Controlling crypto-currencies, but allowing crypto-actives, encouraging crypto-services,” Garg said at an event organized by ASSOCHAM, the IT industry body.
Exploring Use Cases
The report also suggests states that the committee could be responsible for exploring the blockchain use cases and making recommendations for cryptocurrencies, as digital assets, rather than as currencies. The Committee may also be asked to study ways in which the digital rupee by the Reserve Bank of India (RBI) can be operationalized. One source said that there is a view within the government that the Garg committee report is dated and therefore, a fresh look at the issue is warranted.
In addition, unnamed sources said that the Ministry of Finance is consulting the industry and regulators on possible supervisory risks. By the end of the month, Finance Minister Nirmala Sitharaman will be briefed on a wide variety of developments in the cryptocurrency industry.
Recent updates on cryptocurrency regulation
In January, the Government had announced plans for introduction of a law which will ban “private” cryptocurrencies while at the same time provide the RBI with the legal powers needed to develop a centrally-backed digital currency (CBDC). It would also penalise the possession of cryptocurrency.
Since then, crypto-industry in India has developed extensively. Industry associations such as the IAMAI have advocated for the government to regulate cryptocurrencies. Recently, the government had asked companies and crypto-exchanges to disclose crypto related transactions and the Minister of State for Finance and Corporate Affairs had said that they are “approaching cryptocurrency with an open outlook.”
The UK and Russia have announced to explore the idea of a CBDC, while Turkey has banned cryptocurrencies for purchases.
Do subscribe to our Telegram channelfor more resources and discussions on technology law and news. To receive weekly updates, don’t forget to subscribe to our Newsletter.
You can also follow us on Instagram, Facebook, LinkedIn, and Twitter for frequent updates and news flashes about #technologylaw.