Quartz India reports that financial regulators in the region could be drafting official cryptocurrency regulations before the end of the year. Indian lawmakers have been under heavy pressure in recent months by crypto traders and startups to clarify the unofficial cryptocurrency ban that came into effect in July. A counter-affidavit penned by the Narendra Government was filed with the supreme court on November 19th. The document lays out a claim by a joint group of crypto exchanges, accusing the Indian government and central bank of choking the developing digital money ecosystem.
The Indian government first assembled a finance ministry panel tasked with drafting the norms for virtual currencies in November of last year. The panel is headed by top civil servant and current secretary in the department of economic affairs Subhash Chandra Garg. The recently published counter-affidavit details the finance ministry panel’s agenda for the coming coming weeks:
“…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. The draft report and bill will be circulated to members of IMC (inter-ministerial committee). Thereafter the next meeting of IMC will be held so that discussion can take place on the draft report and bill. It is expected that the draft report will be placed before the IMC by next month.”
The finance ministry panel will be holding two meetings in the coming months, one in December and another in January of next year. During that time, Garg and his team will be deliberating a draft report and drawing out the provisions for a draft bill on virtual currencies.
How Did We Get Here?
India’s strict crackdown cryptocurrencies began in April of this year, and was led largely by heads of the Reserve Bank of India, the country’s central bank. Beginning in April, the RBI began to urge banks and financial institutions to cease any business relationships they might have with virtual currency exchanges within three months. Exchanges nationwide expressed opposition to the RBI’s efforts from the onset, and the matter has since between deliberated on numerous occasions in federal courtrooms.
On October 25th, deliberations came to a halt, as the courts requested the government file a counter-affidavit, outlining its policy regarding virtual coins, Quartz India reports.
The counter-affidavit states that Garg’s panel has held two meetings since November of last year, in addition to several informal meetings, to familiarize itself with the digital money economy. The initial deadline for cryptocurrency regulation was scheduled in July, but has since been delayed. Garg believes that finalized crypto regulations in India should arrive by the end of March, 2019.
Prior to assembling the finance ministry panel, the Indian government had created a specialized task force to draft a regulatory framework for crypto. The task force concluded that extremely strict regulations on trading crypto would be in the best interest of protecting investors:
“It was recommended in this report that warnings should be issued to the effect that cryptocurrencies are not coins or currencies, and for consumers to stop trading in these currencies. It was also recommended to take appropriate action for consumer protection by enforcement agencies in relation to such trading. It was further recommended that another committee be constituted with members of DEA, RBI, SEBI, Department of Revenue, Department of Legislative Assembly, DoCA (Department of Consumer Affairs) and MeiTY to suggest further course of actions.”
The task force’s report was attached to the government’s November 19th counter-affidavit.