In what could be a major development, the Indian government is rethinking its stance on the country’s fledgling but promising crypto industry. Official sources have informally confirmed that the government is planning to set up a new committee to study the latest developments in the field of cryptocurrencies and blockchain technology and suggest proper regulations.
As per a report in The Economic Times, Minister of State for Finance and Corporate Affairs Anurag Thakur has been meeting various stakeholders from the crypto industry in India over the past few weeks. The finance ministry was also closely watching the growing interest of retail investors in crypto assets. Finance Minister Nirmala Sitharaman is expected to receive the preliminary report on the deliberations so far by the end of this month when a formal decision to institute the panel is likely to be taken.
The change in the government’s views on cryptocurrencies is a result of growing realization within the government that the previous panel led by former finance secretary Subhash Garg is outdated and obsolete. This panel in 2019 had recommended a blanket ban on cryptocurrencies in India.
Based on the recommendations of this panel, the government had prepared a bill — the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 — that aimed to ban all cryptocurrencies in India and provide regulatory frameworks for the launch of an official altcoin supported by India’s central bank, the Reserve Bank of India (RBI). The bill was to be tabled in the Indian Parliament in February this year but the government deferred the move, ostensibly, because of the rising number of Covid-19 cases in the second wave of the pandemic.
As per reports, the new panel will study the possible use cases of blockchain and regulations for cryptocurrencies as stores of value rather than currencies. It may also look at the feasibility of RBI launching its digital coin.
For the past few weeks, the crypto industry in India was making news on all fronts. On one hand, trading volume on the country’s major exchanges was steadily growing despite a complete absence of crypto regulations, on the other hand, Indian banks were denying regular banking services to crypto exchanges and traders in a blatant violation of a Supreme Court ruling in this regard.
Meanwhile, India’s celebrated tech entrepreneurs and professionals stood the ground in favor of cryptocurrencies. In a highly-publicized blog, former Coinbase CTO Balaji Srinivasan made a strong pitch for the adoption of crypto by IndiaStack, an API that efficiently facilitates digital transactions for billion-plus Indians.
Only Tuesday (18 April 2021), Indian crypto MATIC (which is now known as Polygon) set the Indian crypto industry on fire by becoming the first home-grown crypto company to cross the market capitalization of $10 billion. It saw over 140% appreciation in a week at a time when all major cryptocurrencies were on a downslide.
Reacting to the developments, Nischal Shetty, CEO of Binance-owned Indian crypto exchange WazirX tweeted: “Finally India plans to regulate & not ban Crypto. 2019 bill is outdated. It’s amazing to see progressive thought from our Government.”