With draft legislation in sight, is the Indian government finally prepared to embrace crypto?
India is not a nation that often finds itself in a discussion centered on crypto-friendliness. On the contrary, those that engage with blockchain assets have received a range of threats from high-level organizations to stay away from the phenomenon.
For example, just last month the head of the National Association of Software and Services Companies (NASSCOM), Debjani Ghosh, stated that the use of cryptocurrencies in their entirety was prohibited by Indian law. And then earlier in July, the Reserve Bank of India, the nation’s central bank, formally banned Indian financial institutions from facilitating transactions linked to cryptocurrencies.
However, reports suggest that Indian authorities may finally be changing their tune, with the introduction of draft cryptocurrency legislation in sight. The report, published by Indian media platform Quartz, claims that the draft bill will be presented to parliament by the end of December, subsequently providing the sector with some much needed legal clarity.
Within the document submitted by the Department of Economic Affairs, it states:
“Currently, serious efforts are going on for preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology in the financial system and framework for digital currency in India.”
This will be welcome news to an Indian blockchain space that has been sat in a somewhat “Grey Zone” of late. A group of leading cryptocurrency exchanges based in the country are currently in a lengthy legal case with the Supreme Court, arguing that both the government and central bank are hindering the sector’s growth.
This lack of clarity has also led to a range of high-profile arrests. Earlier this month, it was reported that developers of India’s first ever Bitcoin ATM had been arrested by Bangalore law enforcement. Moreover, Unocoin, a third party cryptocurrency exchange, had its founders arrested for charges linked to forgery, criminal conspiracy and cheating.
Although it remains unclear at this moment in time as to what stance the Indian government will take when the first draft bill is ready for scrutiny, it is hoped that the proposed legislation will ease the barrier of entry for those looking to innovate in the blockchain arena.
Regardless of the regulatory uncertainties currently facing the country, it was reported last month that WazirX, a platform that allows Indian residents to buy, sell and trade Bitcoin, is seeing a remarkable 35% growth in trading volumes in comparison to the previous few months. If this seemingly strong appetite towards cryptocurrency continues, it may swing the Indian authorities to enact a regulatory framework that embraces the industry.
Most importantly, as the nation hinted back in March of this year, a framework could allow the government to collect taxation revenues on the back of crypto-related profits. This is potentially a lucrative avenue to take, especially when one considers that India is home to more than 1 billion residents.
Either way, the next few months could be a very interesting period for the Indian blockchain space.