As India works on the bill to regulate cryptocurrencies, each government
department has its own opinion on whether to ban the use of crypto, including
bitcoin. The Finance Ministry, the Reserve Bank of India (RBI), the Income Tax
Department, and the Special Investigation Team have voiced their opinions on
the upcoming bill.
No Consensus Among Regulators
India is preparing a bill on the regulation of
cryptocurrency. “The bill has been drafted and consultation has been started
with the concerned agency,” the Navbharat Times reported last week. The
news outlet quoted sources explaining that the regulators are divided on
whether to ban the use of cryptocurrencies such as bitcoin.
“The finance ministry is in favor of
regulating [cryptocurrency],” sources said. The Income Tax Department, on
the contrary, is not in favor of regulation, the news outlet conveyed, and
quoted sources explaining:
The
regulation of virtual currency is almost impossible and it promotes the use of
black money.
The RBI “is also not in favor of banning virtual
currencies,” but sources pointed out that “the current form of the bill
proposes to ban virtual currency businesses.” However, there may be exemptions
for “issuing crypto tokens in exchange for assets.”
Meanwhile, the Indian Special
Investigation Team (SIT) “wants to ban the use of bitcoins” after discovering
at least four cases where the digital currency was used to pay for drugs, the
Sunday Guardian reported. The SIT comprises of officials from the Narcotics
Control Bureau (NCB), the Enforcement Directorate (ED), the Central Bureau of
Investigation (CBI) and the Income Tax Department.
The SIT has previously asked the ED, NCB and the Income Tax
Department “to take adequate measures to prevent the use of cryptocurrencies,”
the publication noted, adding that the Team “has called for a second round of
meetings to be held in Delhi next month, where the officials from all the
aforementioned agencies will review the use of cryptocurrencies.”
Experts Say Crypto Ban Not Very Feasible
The debate is also taking place in the private sector. Sarvesh
Tyagi, a Delhi-based cyber law expert, told the Sunday Guardian that “it is
doubtful that the SIT will succeed in banning the use of cryptocurrencies. Ban
is not a solution. We need a regulatory authority.” She elaborated:
A
blanket ban on the use of cryptocurrencies is not a very feasible solution as
drug smuggling is a big problem, and in most cases, these transactions have
nothing to do with use of cryptocurrencies.
Crypto Businesses Fight Back
The RBI announced earlier this month
for banks and payment gateways under its control to stop providing services to
businesses dealing in cryptocurrencies. “Banks have already sent notices to
exchanges,” Sathvik Vishwanath, CEO of a leading Indian exchange Unocoin, said.
The RBI allows banks “about 3 months of time to end the
relationships” with crypto businesses, he noted, adding that crypto companies
“will be attempting to challenge the [RBI] order” in the Supreme Court as a
consortium.
One company, Kali Digital
Eco-Systems, has already appealed to the High Court in Delhi against
the recent RBI crackdown. The company is behind the upcoming crypto exchange
called Coinrecoil.
On Sunday, the company announced that
Delhi High Court has accepted its petition against the Indian regulators,
adding that:
Hon’ble
High Court of Delhi has issued a notice to the Reserve Bank of India, the Union
of India through Secretary, Ministry of Finance and GST Council. The next
hearing in this case is on May 24, 2018.
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