The case for cryptocurrency regulations in India is pending in the Supreme Court of India owing to the Indian government’s incapability to present a proper regulatory framework, however, not all was lost.
The Indian Ministry of Finance constituted a Steering Committee on fintech related issues under the chairmanship of Shri Subhash Chandra Garg, the Secretary of the Department of Economic Affairs, Ministry of Finance.
The committee on fintech related issues has finally submitted a report that recommends immediate relaxation in the current regulatory framework and the ban on cryptocurrencies.
The Committee is of the view that nondiscriminatory access must be the norm unless the respective regulator clearly provides reasons for a separate treatment to a specified category of financial firms. The Committee also urges Government and RBI to take necessary steps to eliminate discrimination in access to payments infrastructure to non-banks vis-à-vis with a view to enhancing competition and innovation.
Cryptocurrency regulations in India
However, the government and RBI were soon dragged to the Supreme Court of India where the RBI denied authority to ban cryptocurrencies in the country since the assets are not yet recognized. The matter soon led the Indian government to take a stance on the cryptocurrency regulations in India.
Cryptocurrency usage has increased in the country despite an unclear regulatory framework and the pending case in the Supreme Court of India. However, the Steering Committee that was formalized to present a solution has now urged the government to take measures to reform the cryptocurrency regulations for the greater good of the country.
The members of the committee included; Secretary, Ministry of Electronics and Information Technology (MeitY), Secretary, Financial Services, Secretary, Ministry of Micro, Small and Medium Enterprises (MSME), Chairperson, Central Board of Excise and Customs (CBEC).
Moreover, the Deputy Governor of RBI, Executive Director of SEBI, Chief Executive Officer (CEO) of the Unique Identification Authority of India, and CEO of Invest India are part of this panel. While Additional Secretary (Investment) in the Economic Affairs Department is the convener of the panel.
Steering Committee recommendation for regulations
The steering committee report clarifies that the ban on cryptocurrency and digital payments in the country has been growing rapidly. It recommends that a quick solution must be sought after to bring on the cash payments on to a proper framework.
However, the report avoids mentioning “cryptocurrency” in particular and addresses the matter in the broader picture as digital payments.
The Committee has noted the recommendations of successive government committees for the promotion of digital payments in India. It notes that while the digital payments have grown rapidly in India, still there is a lot of cash payments in the system.
The committee furthers that the full potential of the digital payments systems, and of course the emerging cryptocurrency sphere requires immediate level playing field.
Digital payments have the potential to expand enormously. To realise the full potential, a level playing field needs to be created amongst banks and non-bank players.
Cryptocurrency is currently being traded at a hefty premium in the country, and India is not the only country where the situation is in a deadlock.
However, with one of the country’s most powerful business group Reliance jumping onto the blockchain bandwagon it appears that the government is now playing on the back foot.
All eyes, including; Indian cryptocurrency investors, traders, and activists are now set on the Supreme Court of the country to provide the final relief to the cryptocurrency sphere in the country.
Proper cryptocurrency regulations in India can improve the economy by as much as thirteen billion dollars ($13B) currently outside the government framework due to the ban.