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Will India Regulate Crypto? All Hopes Banked on One Tweet

The sensationalisation of headlines in the media industry is on a rampant path, especially when readers do not prefer to open articles.

Today’s headline making news from India to the crypto community is “U-turn on bitcoin? – Government panel may allow cryptos with riders”

In all saneness the news in itself is Government panel may allow cryptos with riders. That’s it. But to make it a juicy clickbait-y article, the media players wrote a few words around the news like “when RBI released the circular”, or “what the Bitcoin price currently is and how far it has fallen from Dec 2017”.

Here’s the only source of news that quoted by Economic Times.

This is today’s news. We know nothing about the source. There is no detailed report on this. So everything other than these few words are fillers on media articles. But I wanted to go slightly beyond the surface.

Reading Beyond the Tweet

It must be noted at Cogencis, the source of the above news, previously reported that Government is/was mulling a new law to ban cryptocurrency exchanges. The report quoted some Finance Ministry officials talking about the insider news that Government is planning a law to ban crypto exchanges.

Two months later, RBI decided to ban banks from dealing with exchanges. I am not saying they are connected, but the end result is what they presumably wanted.

Two more months later, today, Cogencis is reporting government’s assertiveness to regulate cryptocurrency. “Government bought the dip”, a telegram user said as a joke.

Why U-turn? Government Never Banned Crypto or Showed Intent to

In all instances, the Indian government has never shared an intent to ban cryptocurrency. The finance minister said, “Not a legal Tender” in the Budget speech and later, “We want to discourage people”, in an interview with DoorDarshan.

RBI never said they will be banning cryptocurrency. They merely said, and I am paraphrasing, It is risky and hence we are ring fencing the banks.

Recently, Foreign Minister Sushma Swarag said, “RBI has disallowed Crypto currency”, which by the way is not the case, not directly.

Surely, both bodies do not want to encourage crypto trade in India but they never really decided to Ban it. So we cannot say it is a U-turn on Government’s side.

What are Riders?

A tweet is not enough to decipher what kind of conditions the government will put on regulation of Cryptocurrency. But there has to be some.

Riders are merely conditions placed on a policy or event usually for the benefit of the policy giver not the holder. So what Rider in this case merely means is Government will enforce certain conditions on the exchanges or cryptocurrency holders while allowing its trade.

What they can be is anyone’s guess as of now, but if I had to scratch my head I’d say they would roam around

  • Taxation
  • Income declaration
  • KYC/AML policies

At the end of the day, there is committee sitting on the decision and whenever they come up with one, we will know.

The news has been positively received and the exchanges are seeing the Indian prices for crypto go marginally up. The current prices are at a 3-5% premium over the international market.

What do you think the government should do? Let us know in the comments below

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