According to a recent tweet by member of the Indian National Congress party Priyank M. Kharge, the Indian government intends to research and develop policy for blockchain and cryptocurrencies.
In the tweet, Kharge links an article on the apparent power struggle occurring between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) due to differing opinions on cryptocurrency regulation. According to the publication, RBI suggested that cryptocurrencies should be traded similarly to commodities, such as gold and silver, and therefore should be tracked by SEBI to ensure they’re not used for illegal activities, like money laundering and terror funding. However, SEBI has opposed the proposal. According to an undisclosed regulatory official, "It (bitcoin) cannot be classified as commodity derivatives as per extant legal provisions."
The disparity amongst Indian officials comes at a pivotal time in the country of India. Currently, the country is recovering from a recent demonetization of all 500 and 1,000 rupee banknotes from the Mahatma Gandhi Series, implemented by the Indian government in November 2016. As a result, the country has experienced a surge of cryptocurrency investments that has sent Indian officials scrambling for control measures. Shivam Thakral, CEO and co-founder of Indian cryptocurrency exchange BuyUcoin, tells ETHNews that this is exemplified by rigid mandates from government entities.
“The government has strictly guided companies involved in virtual currencies to take proper KYC norms of their customers. The ministry in India which implements the companies’ law has instructed the Serious Fraud Investigation Office (SFIO) regional directors, as well as the Registrar of the companies, to get the details of the companies involved in cryptocurrencies.”
In March, Minister of State for Finance Arjun Ram Meghwal expressed to the Rajya Sabha (Council of States) that “no regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” related to cryptocurrencies. The Dinesh Sharma Committee, which consists of a diverse group of representatives from a number of Indian government organizations, then surfaced in April to conduct a comprehensive review of cryptocurrencies and assist the government with creating a framework. According to Thakral, the committee is actively involved in the regulation process and could release the results of its review “possibly in the month of August.”
Despite previously denouncing their use, Indian officials seem to be trying to forge a somewhat harmonious relationship with cryptocurrencies. In May, the Indian government sought public opinion on how cryptocurrencies should be addressed. For now, cryptocurrency businesses will have to cope with the Indian government’s uncertainty. Thakral went on to say:
“Currently, under the existing laws, cryptocurrencies are treated as property and hence capital gain tax is applied on it. But due to its nature of decentralization, its transfer can't be traced as easily as a property, which violates several Indian regulations. Due to which, Indian government is more likely to form some different laws especially molded for cryptocurrencies, as there are many other major existing laws that are breached, like FEMA, and give rise to major concerns like money laundering and consumer protection.”
ETHNews will update this story and any related events as they occur.