This is the first official confirmation from a government body on the subject of Banning of Cryptocurrencies in India.
In a meeting held on Jan 24, 2019 the IEPF authority with DEA, CBDT, CBIC and MCA, unanimously decided “Department of Revenue and Department of Economic Affairs may immediately take steps to completely ban sale, purchase and issuance of all forms and types of cryptocurrencies”.
The Investor Education and Protection Fund (IEPF) Authority in a response to an RTI application by Coin Crunch India has confirmed that the inter-departmental committee, in a meeting, “discussed that it (Cryptocurrencies) has features of Ponzi Scheme”.
The RTI was raised to receive an official communication in lights of multiple media reports in the month of April claiming the IEPF Authority wants to Ban Cryptocurrencies in India. The response to the RTI is the first and only official communication claiming the government body wants to “completely ban” Cryptocurrencies.
Out of 11 questions, the IEPFA responded to just two and cited section 2(f) of the RTI Act, 2005 to avoid answering the rest.
Few Unanswered Questions
The Cryptocurrency community in India has been sitting on the edge for the past couple weeks as reports on a draft bill to ban cryptocurrencies started making rounds. Under the draft bill, a person trading, holding, mining or issuing cryptocurrencies can be jailed for upto 10 years. The information on the bill is being debated till this date.
However, in the response from the IEPFA, the request is to only ban “sale, purchase and issuance” of cryptocurrencies. It means, holding of crypto may be exempted.
The response from IEPFA is a mere confirmation of a discussion and recommendation, it isn’t the policy or law yet. So, until the time an actual official bill is submitted in the parliament for banning of cryptocurrencies, Indian traders can still use multiple avenues to trade cryptocurrencies and crypto assets freely.
Disclaimer: We wrote an incorrect name to reference the CEO of IEPF Authority in the RTI application, hence the first question became invalid and we did not get an apt response.
This response confirms that the Reserve Bank of India was not part of the meeting and neither was the Securities and Exchange Board of India (SEBI). These are the two authorities that are touted as key players in regulation of Cryptocurrencies.
This begs to question, if the panel set up by Government in December 2017 headed by the Secretary, DEA and now Finance Secretary Subhash Chandra Garg to examine a framework for regulating cryptocurrencies in the country is really making an effort to involve multiple stake holders in such discussions? And if not, is that even correct?
RBI’s diktat to banks
In April 2018, the RBI issued a diktat asking banks and financial institutions in the country to stop all banking activities and financial transactions with cryptocurrency exchanges.
The RBI order had adversely impacted the businesses of over a dozen crypto exchanges. Exchanges like Zebpay, CoinDelta, Oxybit have shut down their operations. Another exchange Coinome announced their closure on Monday.
Now all eyes are set on two major events. First one is the Supreme Court hearing set for July 23, 2019 where the exchanges and individuals have appealed against the RBI Diktat.
Second one is the G20 committee meeting being held in Japan. Reports Japan being one of the few countries that is progressively regulating cryptocurrencies, is going to present guidelines on regulation of the same in other member nations.
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