Government to legalise and regulate cryptocurrency?

Chennai: The Indian government may give in to the cryptocurrency war as it sees possibilities for regulating the online currency format, reports have stated.

The tug of war between the authorities and the country’s crypto community started a little over a year ago and it has now been stated that an interdisciplinary committee set up by the government is now in favor of legalizing and regulating cryptocurrencies rather than putting an outright ban shunning them from the economy.

A media entity has reported a senior official as saying, “We have already had two meetings. There is a general consensus that cryptocurrency cannot be dismissed as completely illegal. It needs to be legalized with strong riders. Deliberations are on. We will have more clarity soon.”

The news came days after another leading media house reported that the same committee is set to ban cryptocurrencies within the country’s borders.

This is the second committee formed by the government to study the nascent and lucrative sector. The committee was set up by the government in April 2017.

Members of this inter-ministerial committee include the revenue secretary and officials from SEBI, RBI, and MeitY (Ministry of Electronics and Information Technology).

In February 2018, the country’s Finance Minister echoed the decision and declared cryptocurrencies illegal tender in his annual budgetary speech in the Parliament. This followed a circular by the central bank which ordered all banks in the country to close all ties with cryptocurrency exchanges and firms.

However, a consortium formed by the crypto businesses operating within the country went to the Supreme Court against the central bank’s order.

Another meeting of the committee is scheduled for January and it will be very interesting to see the fate of crypto in the country.

“We have also taken inputs from cryptocurrency exchanges and experts and will be examining legal issues with the Law Ministry. It’s a complicated issue. Once all aspects are decided, then we will have more clarity,” the official added.

Previously, the committee members proposed to develop a legal basis to ban private currencies circulation on the territory of the country, thus the latest developments indicate a softening of stance towards digital assets in India.

In April, the Reserve Bank of India forbade the local banks to provide services to the companies engaged in cryptocurrency industry. Seeking ways to survive, the Indian cryptocurrency exchanges filed a petition to the country’s supreme court, which, in its turn, ordered the government to provide guidance by the end of the year.

The Committee will submit a comprehensive report on the industry to the Ministry of Finance by February 2019.

FB in it too
According to a media report, social media giant Facebook is working on developing a type of cryptocurrency called ‘stablecoin’ that would enable money transfers on WhatsApp. Stablecoins are virtual crypto currencies which are designed to minimize the impact of price volatility.

Notably, Facebook is far from releasing its virtual currency just yet. People familiar with the matter have stated that the social media giant is still working on formulating a strategy regarding the project. This would include a plan for the transfer of custody of asset or regular currencies which in turn would help in protecting (and thereby stabalising) the value of Facebook’s stablecoin.

However, it remains to be seen how Facebook uses its virtual currency for the WhatsApp money transfer feature, especially in India where cryptocurrencies face a ban by the country’s central bank i.e. Reserve Bank of India.

NT Bureau