Key takeaways:
- India’s crypto legislation might be introduced during the next budget debate in February 2022.
- In May 2021, the Reserve Bank of India instructed licenced banks not to caution consumers against crypto trading.
India, which has always been cautious of cryptocurrencies, has yet to decide whether to prohibit them outright or regulate virtual currency transactions.
Currently, India lacks a legislative framework that governs the issue, usage, and trading of cryptocurrencies. As a result, India is the world’s fastest-growing crypto marketplace, with an estimated 15 million Indians investing in cryptocurrencies. Despite the seeming hazards of investing in an unregulated product, a combination of variables, including hundreds of start-ups operating in this market, has fueled an unparalleled investment boom.
The new framework is expected to depart from a previous proposal that called for a total ban on cryptocurrency. Instead, the government is likely to regulate cryptocurrencies as a type of “asset.” The committee suggested that cryptocurrencies be banned in the nation and that violators face jail time. People were already on edge when the Reserve Bank of India, the country’s central bank, issued a de facto ban on cryptocurrencies in 2018.
In September of this year, RBI Governor Shaktikanta Das stated that the central bank had expressed serious and significant worries regarding cryptocurrencies from financial stability. “The government will take a decision. I think we need more credible answers as to whether going forward with the whole private cryptocurrencies, what contribution will it bring to Indian economy.”
However, there was a glimmer of optimism when the Supreme Court overturned the RBI circular in early 2020. However, the absence of regulation continued to worry investors, and rumours of a ban persisted.
According to another official, officials from the Finance Ministry and the Reserve Bank of India (RBI) are still working on fine-tuning the conceptual framework and relevant laws.
Finance Minister Nirmala Sitharaman has repeatedly stated that the government will not entirely ban cryptocurrency.
Sitharaman stated in August that a crypto law is complete and is awaiting approval from the union cabinet before being introduced for debate in parliament.
In March this year, Finance Minister Nirmala Sitharaman said, “While we are very clear that the RBI may take a call on official cryptocurrency, but from our side, we are very clear, we are not shutting all options off. We will allow a certain amount of windows for people to use so that the experiments in blockchain, Bitcoin will have that window available.”
Meanwhile, bitcoin usage in India is skyrocketing. In Chainalysis’ Global Crypto Adoption Index for 2021, India was second. The country currently has 15 million crypto investors.
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