After several months of uncertainty, Indian authorities have moved on to discussing the possibility of banning the use of private cryptocurrencies.
Mr. Garg briefed FSDC Council on:— Crypto Kanoon (@cryptokanoon) October 31, 2018
"..deliberations in the High-level Committee to devise an appropriate legal framework to ban use ofprivate crypto currenciesin India"
Does the abovesaid indicate that the possession and trading of Crypto are going to be permitted?#BPositive pic.twitter.com/RvfX0FhYOM
During the 19th meeting of the Financial Stability and Development Council (FSDC), hosted by the Minister of Finance of India, Arun Jaitley, the cryptocurrency issue was raised once again. According to the publication of the Ministry of Finance, the working group "deliberated on the issues and challenges" associated with cryptocurrency.
At the meeting, officials discussed the problems associated with cryptocurrency and blockchain. They particularly talked about market regulation. At the same time, members of the working group expressed their concerns about the difficulties and problems in this industry.
In particular, the interdepartmental council should have developed a legal framework for cryptocurrencies, but instead, he recommended simply banning them.
“The Council also deliberated on the issues and challenges of Crypto Assets/Currency and was briefed about the deliberations in the High-level Committee chaired by the Secretary (Economic Affairs) to devise an appropriate legal framework to ban use of private cryptocurrencies in India and encouraging the use of Distributed Ledger Technology, as announced in the Budget 2018-19.”
Moreover, the concept of “private” cryptocurrency is not disclosed in the document. Probably, according to the classification of local authorities, this may include all non-state digital currencies, including bitcoin. The same can affect trading and the use of digital money as a means of payment.
The concept of “use” may extend, including the trading and the use of digital currencies as an instrument of a settlement, but not affect their ownership.
Cryptocurrency trading in India slowed down significantly after the Reserve Bank of India prohibited regulated financial institutions from interacting with cryptocurrency companies earlier in April.
At the end of September Zebpay, India’s largest cryptocurrency exchange has suspended trading on its platform due to its inability to work effectively under the prevailing conditions. Later on, in the middle of October, it became known that the platform has moved its main office to Malta. Now Zebpay, which got the registration under the name Awlencan plans to concentrate on servicing traders from EU countries.
Other crypto exchanges have decided to take a hard path and entered into a legal tussle with the RBI and the government.
“A ban is counter-productive, therefore, we have suggested that there should be appropriate regulations that can address the government or the central bank’s concerns,” said Anirudh Rastogi, managing partner at legal firm TRA Law, which filed the supreme court petition for four exchanges.
During the last hearing that was held on October 26, the Supreme court set a two-week period for the government to state its vision on the matter and express its opinion about the future of cryptocurrencies and cryptocurrency exchanges.
Last week, Indian police seized a crypto terminal from Unocoin, the largest Indian cryptocurrency exchange with 1.2 million users, that announced the first opened crypto ATM just at the beginning of October. The Bangalore police arrested Harish BV, a 37-year-old co-founder of the Unocoin exchange, and seized a recently installed cryptocurrency exchange terminal. Police have also confiscated laptops, smartphone, credit cards and cash in the amount of $2,500 from Harisha Bv.
Unocoin’s ATM was allowing investors who were previously verified within the Know-Your-Customer (KYC) procedure to directly deposit or withdraw Indian rupees to their stock exchange accounts. Police said that due to the lack of licenses from the Reserve Bank of India and the Securities and Exchange Commission, Unocoin has no right to maintain the terminal. It was also noted that there was no bitcoin exchange rate indicator in the terminal.
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