India's growing step towards bitcoin regulation
Ban U-Turn? India’s Central Bank Admits Cryptocurrency Regulation is Necessary
In a first, India’s central bank has called for the regulation of the domestic cryptocurrency sector during Friday’s hearing at the Supreme Court, weeks after enforcing a banking ban against crypto companies.
Earlier in April, the Reserve Bank of India (RBI) issued a circular that forbade all financial institutions – banks included – from offering services to businesses in the cryptocurrency sector. Furthermore, the policy also mandated banks to stop customers from purchasing cryptocurrencies using fiat funds in their banking accounts.
A public interest litigation (PIL) filed in India’s Supreme Court calling for regulation of the cryptocurrency sector saw the central bank absolve itself of any responsibility in framing a policy, claiming it was a policy matter requiring legislation through India’s Parliament rather than a subject of debate among courts.
Amazingly, the RBI then admitted that it – as a central bank responsible for framing monetary policies in the country – conducted no research nor consultation before enforcing the prohibitive policy in keeping banks from offering services to cryptocurrency businesses and exchanges.
As CCN reported last week, India’s Supreme Court finalized a September date as the final hearing from the crypto industry petitioning against the central bank banking ban. It has also come to light that the lawyer representing the central bank also underlined the need to regulate the sector, the first notable instance wherein the RBI has called for regulation as a matter of policy.
Regulation Expected by September
The Indian government is expected to issue detailed cryptocurrency guidelines by September, a senior official from the country’s Ministry of Finance reportedly said. Consultations with all stakeholders including the central bank have already begun. This announcement is independent of the supreme court’s hearing of petitions relating to crypto regulation in India.
The Indian government has reportedly finished drafting the regulatory framework for cryptocurrencies. The New Indian Express wrote on Saturday that the government is “likely to issue guidelines on cryptocurrency by September.”
This news follows the statement last month by the country’s Economic Affairs Secretary, Subhash Garg, confirming that the draft law would be ready by mid-July.
Citing that stakeholders include the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Internet and Mobile Association of India (IAMAI), an unnamed senior official from the Ministry of Finance told the news outlet:
“The ministry has constituted an interdisciplinary committee under the chairmanship of Special Secretary (Economic Affairs) to examine the regulatory framework regarding virtual currency,” the publication detailed. “SEBI and RBI have expressed some reservations regarding clauses in the initial draft.”
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