India’s latest bid to review its ‘crypto-regulations’ – What to expect?

The question about crypto-regulations has become a never-ending game of plucking out a daisy which ends up growing an extra petal right when you think you’ve arrived at an answer. Such is the situation in India too where a large crypto fanbase has been waiting to hear from regulators whether they will favor crypto or just ban it.

In what is not so much of a new event, the Indian government is said to be reviewing the key aspects of the bill that proposes a ban on cryptocurrencies. Reports suggest that the government has finally decided to sit down with financial regulators and industry stakeholders to analyze the provisions mentioned in the bill.

More specifically, they will be reviewing provisions that will touch upon issues such as a possible ban of crypto, regulation of crypto, and the classification of crypto.

Now, this is a suggestion that has been made for a long time by many in the crypto-community. The establishment of such a committee is only likely to further the government’s understanding of cryptocurrencies. And now, crypto stakeholders have finally gotten a seat at the table. So this could result in crypto’s favor, right?

No.

A week back, other sources had revealed that there has been a shift in the government’s aggressive position towards crypto and that it was likely to classify Bitcoin as an asset class in the country. Despite the government and the crypto-community coming together to discuss crypto, however, the central bank has remained wary and alerted the central government about concerns ailing the technology’s adoption in the first place.

Recently, we saw the prominent cryptocurrency exchange WazirX and its directors Nischal Shetty and Sameer Mhatre issued

a show-cause notice by the Enforcement Directorate [ED]. The notice was issued for allegedly violating guidelines in connection with transactions worth Rs 2,790.74 crore. The ED stated that the notices followed its ongoing money laundering into “illegal” Chinese-owned online betting applications.

The authorities claimed that the exchange did not collect requisite documents in clear violation of the basic mandatory Anti-Money Laundering [AML] and Combating of Financing of Terrorism [CFT] precaution norms and FEMA guidelines. However, the CEO of the crypto-exchange, Nischal Shetty, pointed that the exchange has gone “beyond our legal obligations by following KYC and AML processed and have always provided information to law enforcement authorities whenever required.”

In the light of recent events, a review of the “ban bill” is not enough to know what shape crypto-regulations will take. With the Reserve Bank of India remaining hesitant and the government trying to maintain a balance, the crypto-community will have to suffer the long wait until a consensus is reached.