The verdict on cryptocurrency in India has been delayed again and has been pushed to late July. As per the Finance Secretary, Subhash Chandra Gargh, the report pertaining to cryptocurrency regulations is ready and is awaiting a review from the Finance Minister.
India’s nascent cryptocurrency industry has been in shambles due to the uncertainty surrounding crypto assets in the country coupled with the dismal view of the country’s central banking body. Much to the dismay of crypto enthusiasts, unverified news reports in recent times have painted a dire situation with the cryptocurrency legislation in India. We examine the impact that cryptocurrency regulations in the country would have.
The litmus test
Should the ensuing decision taken pertain to protecting investors from scams and other nefarious activities then imposing regulations efficaciously becomes an arduous task. A pragmatic approach would be to impose regulations over a span of time instead of immediately. For every country is working with regulatory drafts while consulting industry participants.
Being that the blockchain is still in its early stages, having a sandbox approach would ensure that the framework is well suited to accommodate significant changes. This would ensure that trust and security are built into the regulatory network in a more meaningful way. The advantage of having a crypto regulatory sandbox is that it facilitates a live testing environment that ensures security checks and regulatory compliance for financial operations involving blockchain-based systems and crypto assets.
Many regulators around the world such as the Financial Conduct Authority use a sandbox as crypto companies can test their innovations with a small number of consumers. The Indian crypto community has been vociferously advocating the cause of crypto-assets through its campaigns made to the erstwhile Finance Minister Arun Jaitley. Presently, there is no clarity about whether the various recommendations of crypto based businesses in India are being taken into consideration by the government body.
The verdict on cryptocurrency regulations has been postponed twice already. The question on everyone’s mind is if a ban would ensue. It would augur well if the government were to offer some notion about the direction that they are likely to take. Should regulations happen then a sandbox approach would make the most sense. India has more to lose by banning crypto assets and shutting the door on an emerging technology that is brimming with boundless potential. Presently, the government has not been doing anyone any favors by sending across mixed signals.
Since the central banking body of India has directed banks to stop doing any business with crypto-based businesses, there has been an unofficial ban on cryptocurrencies in India. Many crypto related businesses have been greatly affected. Prominent crypto exchanges like Zebpay and Coinomi have moved out of India.
The imposition of a ban or an unsavory regulatory framework could sound the death knell for a promising industry in the country.