For the past few days, there have been fears that India could move to ban crypto in the nation. India has had a complicated relationship with the crypto sector for several years. A while back, the nation’s central bank imposed a total ban on banks, preventing them from processing crypto-related transactions. However, the ban was later reversed by the country’s central bank. Now it appears that the recent fears of a full ban on crypto in India were untrue.
How India will treat Crypto
A recent cabinet note distributed to the Indian government instead proposes to deal with crypto as a separate asset class. The fears of a total ban on crypto in India arose from a bill that was introduced by lawmakers in India. In the bill, there were proposals to make handling crypto anywhere in India illegal.
According to a local media report, the cabinet note calls for India to regulate crypto as an asset class instead of imposing a total ban. The proposal calls for all types of crypto to be considered as a new asset class, which would be called “crypto-assets.” Regulation of this asset class would fall under the Securities and Exchange Board of India (SEBI), which is in charge of securities regulation.
However, crypto would still not be accepted as a payment option or legal tender in India. While the country will not accept the use of crypto as legal tender, a digital currency is being worked on by the nation’s central bank.
For those holding crypto coins in foreign entities, Indians would need to declare and transfer their assets to local crypto exchanges. In India, it will mean that crypto holdings will be treated as an investment instead of a currency. Users would not be allowed to hold their assets in a personal wallet or foreign exchange.
The reversal in policy seems to have been inspired by a speech given by the country’s Prime Minister Narendra Modi. He said that a total ban could endanger the local youth. The Prime Minister added that such a move could have “serious concerns on macroeconomic and financial stability.”
Would a Ban Be Effective
When the ban was announced, some questioned whether it was feasible to enforce such a law. They believe that a ban would only push the sector underground, away from oversight by the nation. For instance, the point to South Korea, which after banning ICOs for a few years, is now considering reversing the ban. One Indian told a news reporter that central bankers and the government were at least 10 years behind.
Another nation that has had a tumultuous relationship with crypto is China. For a while now, the country has continually declared crypto transactions illegal. Despite various declarations, the country remains a leader when it comes to crypto mining.
The most effective solution would thus appear to be regulation for the sector. Doing so not only helps to protect the population from scammers but also ensures that it is easier to monitor the sector to prevent misuse by criminals.