India’s Minister of Finance, Nirmala Sitharaman, gives a vague response when asked about crypto regulation. To make matters worse, she repeats previous comments made about windows of experimentation.
After much back and forth on the matter, Indian investors are none the wiser regarding the future of cryptocurrency.
Will They Or Won’t They?
Indian authorities have broached the issue of a crypto ban since at least 2018. Back then, the Reserve Bank of India (RBI) said regulated entities could no longer deal with crypto businesses. In effect, blocking on/off ramping for investors.
“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [virtual currencies].”
However, in March 2020, this was overturned by the Supreme Court who deemed the ruling unconstitutional.
Many cheered this decision, branding it a victory for commonsense. But the status of cryptocurrency was thrown back into doubt at the start of this year with the introduction of a sovereign digital currency bill. This set out the framework for a central bank digital currency while also stipulating a ban on private cryptocurrency.
Weeks later, following an outpouring of resistance, Sitharaman responded by saying the government has no intention to close down all options. Adding they are open to the idea of windows of experimentation.
“From our side, we are very clear we’re not shutting all options off. We will allow a certain amount of, a window for people to use, so that experiments in blockchain, Bitcoin, or whatever you may want to call it.”
Dicey Situation For Indian Crypto Investors
At the end of May 2021, the RBI issued another statement advising regulated entities not to follow its previous 2018 guidelines. Some think this means the RBI now approves of crypto trading. But there remains no official guidance on the matter.
When Sitharaman was asked about the status of the sovereign digital currency bill recently, she said the government has received stakeholder input. But the issue still requires Cabinet discussion.
Sitharaman’s comment made no distinction between the central bank’s digital currency and private cryptocurrencies. She also repeated comments made in March 2021 about experiments and pilot projects.
“We have done a lot of work on it. We have taken stakeholders’ inputs. The Cabinet note is ready. We have to see when the Cabinet can take it up and consider it so that then we can move it.
From our side, I think one or two indications that I have given is that at least for fintech, experiment and pilot projects a window will be available. The Cabinet will have to take a decision.”
Taken at face value, this means only commercial operators will have the right to dabble with crypto. With no indication otherwise, the future of cryptocurrency in India is far from certain.
Data shows Indian crypto investments grew from $200 million to $40 billion over the last year.