Cryptocurrency in India is legal but a pending bill with the government could change things
- Banks can now deal in cryptocurrency after the Supreme Court quashed the Reserve Bank of India’s (RBI) ban.
- However, a proposed bill is still pending with the government that could make it difficult for cryptocurrency players to survive in India.
- The regulatory uncertainty is probably the biggest concern for the government, Siddharth Mahajan, a partner at law firm Athena Legal, told Business Insider.
The Supreme Court quashed the Reserve Bank of India’s (RBI) circular that banned banks from dealing in cryptocurrency. And, investors are looking forward to using the Indian currency to be introduced onto crypto exchanges. However, regulations could still make it difficult for cryptocurrency players to survive in India.
View all Offers
View all Offers
OnePlus Nord 2 5G (Gray Sierra, 8GB RAM, 128GB Storage) I Extra upto Rs.1000 off on Exchange₹ 29999Buy On
OnePlus Nord 2 5G (Blue Haze, 8GB RAM, 128GB Storage) I Extra upto Rs.1000 off on Exchange₹ 29999Buy On
- 18% OFF
Redmi 9A (Nature Green, 2GB RAM, 32GB Storage) | 2GHz Octa-core Helio G25 Processor | 5000 mAh Battery₹ 6999₹ 8499Buy On
- 19% OFF
Redmi Note 10 (Aqua Green, 4GB RAM, 64GB Storage) -Amoled Dot Display | 48MP Sony Sensor IMX582 | Snapdragon 678 Processor₹ 12999₹ 15999Buy On
- 18% OFF
Redmi 9 (Carbon Black, 4GB RAM, 64GB Storage) | 2.3GHz Mediatek Helio G35 Octa core Processor₹ 8999₹ 10999Buy On
There’s a still proposed bill pending with the government that could prove tenuous — the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.
TOP VIDEOS FOR YOU
“It remains to be seen if the government will rethink the proposed bill in light of the Supreme Court judgement. This regulatory uncertainty in India is probably the biggest concern for the government,” Siddharth Mahajan, a partner at law firm Athena Legal, told Business Insider.
If new regulations are to come into place, they will have to differentiate between currencies, utility tokens and commodity-backed tokens — each of which serves a different purpose.
“RBI should not be concerned with commodity-backed or equity tokens. Utility tokens should be subject to light regulation to the extent of checking whether they are really utility tokens and to ensure that taxes are paid,” said Srinivas Katta, a partner at Induslaw.
Can cryptocurrency replace real money?
Right now, cryptocurrency doesn’t pose much of a threat. It’s a long way from becoming any kind of financial instrument capable of replacing real currency, according to Mahajan.
“It remains to be seen if the cryptocurrency business in India is positioned as a financial instrument or commodity with underlying value. The biggest fear of the RBI is the proliferation of unregulated financial instruments which are not backed by the state,” he explained.
Rather than impose regulations immediately, Katta believes that policymakers should allow virtual currencies to run for a while before making any decisions. If implemented properly, they could help create a more inclusive economy.
“Crypto-currency and tokens are an important development and can enable further formalisation of the economy if properly implemented. They can also promote new industries and bring in a lot of investment. They can also promote the ease of doing business, which is very important,” said Katta.
RBI’s ban bore heavy on startups like Koinex, Unocoin, Zebpay, and Cryptokart. According to Internet and Mobile Association of India (IAMAI), companies dealing in cryptocurrency had ₹1365 crore of user funds trusts, with monthly transaction volume around almost ₹5000 crore.
It is unlikely that the government or RBI will let a totally decentralised currency in India flourish in India. Though crypto-currency enthusiasts want it run as a parallel financial system rivalling central banks backed currencies but that is unlikely to happen, according to Mahajan.
Cryptocurrency trading can restart in India after top court removes RBI ban calling it 'unconstitutional'
Top cryptocurrencies in India gain 10-50% after the SC verdict quashing RBI ban
India’s crypto market was worth $12.9 billion in 2017 before it incurred the RBI's wrath
- The Tokyo Olympics are a hive of NFT activity — from pins to moments to artwork
- Twitter is rolling out an update to make Twitter Spaces easier to share and discover
- Tencent and Alibaba Group have lost more than $100 billion in July as China cracked down on internet giants
- Cadbury Dairy Milk's next phase of 'heart the hate' campaign urges bystanders to stand up against cyberbullying by sharing a Purple Heart
- Coinbase, CoinDCX, WazirX and other crypto firms aren’t just looking for engineers but designers, social media wizards, and managers too