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Cryptocurrency in India 2019: Neither Banned Nor Regulated, But Heavily Restricted

  • An answer in Parliament became a key point to understand where India is with cryptocurrency regulations.
  • After several rumours and fake confirmations, it appears that the Government is in no rush to push crypto regulations.
  • Therefore, crypto trading remains legal, as hasn’t been deemed illegal.
  • But your bank accounts are still at risk if used for trading cryptocurrencies.
  • National Digital Currency still on cards.

Welcome to 2019. Much of the world hasn’t changed except of course the last digit of the date, which is now set to 9 instead of an 8 for the next 364 days.

Just as 2018 was coming to an end, few questions regarding cryptocurrencies were answered in the Loksabha – the lower house of India’s parliament.

Pon. Radhakrishnan, the minister of state in the Ministry of Finance answered questions related to regulations and monitoring of cryptocurrencies in India.

Who Asked the Questions

Three Members of Parliament asked a total of five unstarred questions- questions asked in written in Loksabha, which also receive the answers in written format.

Two of the three MPs who posed the questions are Feroze Varun Gandhi and Bharatendra Singh from BJP. The other MP Arvind Ganpat Sawant is a South Mumbai MP from Shiv Sena.

Crypto Trading Not Banned

When asked about the stance of Government on legality of cryptocurrencies, the answer said government does not recognise cryptocurrencies as legal tender. However, permitting crypto trading is under deliberation by the interdepartmental committee headed by Secretary of Economic Affairs Subhash Chandra Garg.

There is no explicit ban on cryptocurrencies or cryptocurrency trading. Speculations around banning cryptocurrencies floated in some media but they can now be put to rest as there isn’t any decision made yet.

No Timeline for Regulations

While it was confirmed that the Garg committee is deliberating on crypto regulations, the ministry of finance clarified they cannot provide a timeline for regulations just yet.

“The Committee, with representation from MeitY, RBI, SEBI and CBDT is working to develop a framework for regulating cryptocurrencies. However, in absence of a globally acceptable solution and the need to devise technically feasible solution, the Department is pursuing the matter with due caution. It is difficult to state a specific timeline to come up with clear recommendations.”

Shri Pon. Radhakrishnan, Minister of State in Ministry of Finance.

Government isn’t monitoring CryptoTrading

“No sir” is the answer to the question if government is monitoring the value of trade conducted by Indian nationals in cryptocurrency.

Although we have seen the CBDT, SEBI, RBI at different instances taking onus of monitoring and warning users for cryptocurrency trading. In 2017, almost 5 lakh people received notices from Income Tax Department for Cryptocurrency trading.

Crypto Still Heavily Restricted

The April 2017 move by RBI to ban regulated entities from doing business with Crypto traders and exchanges has left a lasting impact. Despite the alternatives such as Peer to Peer Crypto trading and peer to Peer INR transactions, volumes have seen a sharp decline over the past few months. Part of the problem can also be blamed on the long running bear market.

The RBI restrictions prompted exchanges and individuals to take the battle to India’s apex court which is yet to rule on the case. The next hearing is scheduled on January 15.

After the move by RBI, many crypto and blockchain startups moved out of India for ease of operations citing lack of support and guidelines in India.

As we enter the new year, new hopes around positive crypto regulations and possibly a reversal of more than a year long Bear market is on the wishlist.

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