Earlier today a “Breaking News” on Economic Times said – India plans lasting ban on cryptos. We dive deeper into what this means and what was not reported.
Waking up to calls and messages from well wishers and those who want to know if the news is true is not a good thing. I had to collect myself, make some calls, gather information and sit down to write this article when I should ideally be sleeping. Something that we will never be able to rid of is mundane articles with headlines that drive anyone crazy, including me.
As a self-appointed seeker of the underlying truth, I happen to cross paths with someone who would know a thing or two about what really happened within the walls of the ministry that a news such as this made it to everyone’s phone first thing in the morning. But before we dwell into that, let us discuss the supposed news story first.
“A note has been moved (by the finance ministry) for inter-ministerial consultations,” a senior government official told ET.
The crux of the entire article is that following the March 04 verdict of the Supreme Court that quashed RBI’s diktat or Banking ban that prevented banks from providing services in support of cryptocurrecies, the Finance Ministry is moving towards banning cryptocurrencies.
It is imperative to understand, what is a “note”, that is being talked about on ET before we discuss anything else.
“It is simply a Government file used to invite other ministries for discussion”, says Tanvi Ratna, CEO, Policy 4.0. Tanvi is a policy expert with global, interdisciplinary experience in the blockchain and cryptocurrency space. Policy 4.0 provides advisory services to startups and regulators, especially in Blockchain.
The government is following the process that should have been followed after the Draft Bill to ban cryptocurrencies was released last year, she adds.
“This move is not unexpected or out of the blue. This was the expected course of action after the Finance Ministry had launched their report in Feb 2019 recommending a ban on cryptocurrencies”, says Tanvi Ratna.
Can Cryptocurrency be banned in India?
In July 2019, the Department of Economic Affairs released their report on Cryptocurrencies, recommending a complete ban of “private” cryptocurrencies such as Bitcoin, Ethereum, etc. The inter ministerial committee under the guidance of former finance secretary Subhash Chandra Garg also released a bill “Banning of Cryptocurrencies and regulation of official digital currency Bill, 2019”.
The bill proposed a complete ban on holding, mining, trading cryptocurrencies with heavy fines and jail terms for offenders.
The draft bill is supposed to be processed further and be presented in the parliament and be approved for it to become a law. The passing of note within the government is simply a continuation of the old process.
Can this bill be intervened and updated? – Yes, says Tanvi.
Can this bill be rejected in the parliament? – Yes, that is also a possibility.
In conclusion, today’s news may be a small bit of information that suggests the government is moving forward with its original plan and not a new bolt out of the blue on the community.
At this point, both the governments and the industry must open channels for communication among each other to come up with amicable regulations that do not hinder the growth of the Blockchain and Cryptocurrencies in India. The Emerging Technologies wing of Telangana government is already taking a lead on the same.
Personally, I see no reason to panic right now. Can cryptocurrencies be banned? Yes, draft bill or not, India can try to ban cryptocurrencies any day. Can it be done effectively, personally I have my doubts, but you never know.
To summarize, Indian Finance Ministry is now inviting other ministries to take forward a discussion on the draft bill to Ban Cryptocurrencies released in July 2019.
Let us know what you think about this in the comments below.
Update: A statement from Tanvi Ratna was updated.