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India Crypto Regulation Overview

Crypto Regulation

June 15, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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As one of the largest and most vibrant economies in the world, the spread of Bitcoin has undoubtedly impacted India. Unlike the other countries like the US and EU markets where the Bitcoin trade has been on the rise, the Indian market has been full of controversy.

This article gives an overview of the state of the crypto economy’s regulation in India.

Indian Government Provision  

Even though the government of India has been pro-technological development, they have drawn a line when it comes to cryptocurrencies. The government, through financial regulators like the Indian Central Bank and Reserve Bank of India, has taken note of the development of crypto in the country. These entities have not taken kindly the growth of the crypto world. They have continually cautioned traders and other users from adopting the coins.  

Like the Indian Income Tax Department and Enforcement Directorate, the other regulators have moved to shut the businesses dealing in crypto. They claim such enterprises are prone to anti-money laundering breaches and foreign exchange violations.

For a short duration in 2018, it seemed like the government softened its hard stance on crypto trading. This was after it formed a committee to monitor the state of the crypto in India and globally. The committee was also to look for the best practices to ensure consumer protection and avoid money laundering.

All these initiatives went down the drain when the government, through the RDI, provided a circular limiting the Indian financial institutions from trading in crypto. While not outlawing the use of crypto, it made it incredibly impossible to deal with the coins.

The role of Judiciary

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In a case where the government has continually suppressed the use of the crypto coins while not openly stating a ban, the judicial system remains the only avenue to address concerns. Both the government and trading entities have filed petitions at the courts seeking either outlawing or reaffirming the crypto use. 

The government, through the ministries of Finance, Electronic and Information Technology, and law and Justice, have filed petitions to the Supreme courts to outlaw the use of cryptocurrency in the Indian economy.

They claim the nature of the coin allows for its use in money laundering and to support crimes like terrorism. The difficulty in regulating the crypto coins also makes it a potential trade malpractice tool for the consumers. 

The supporters of the coins, on the other hand, seeks to compel the government to provide a full direction on the state of the currency. While the Supreme court has delivered several guidelines, the government keeps providing stricter measures for crypto trading.

Conclusion

With a continued impasse between the government and the other supporters of crypto coins, the future of the currencies in India remains uncertain. However, there are hopes of the government softening its hard stance after some time. It is also yet to be seen how the government fulfils the supreme government directives.

For now, the regulation status of crypto coins in India remains a tightly controlled, or almost outlawed affair for typical traders.  

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