Cryptographic map: PM meeting calls for “progressive” steps, caution in the face of hype

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Prime Minister Narendra Modi chaired a meeting on Saturday on the way forward for the management of the cryptocurrency sector where a consensus emerged that the government must take “progressive and forward-looking” measures while ensuring that an unregulated crypto market does not lead to “money laundering and terrorist financing,” sources said.

At the meeting, sources said, concerns were expressed over what were seen as “attempts to mislead young people with overly promising” and “non-transparent” advertisements.

Sources said the meeting was the result of a consultative process, with the Reserve Bank of India, the Ministry of Finance and the Home Office having polled “experts from across the country and the world.”

Several sources told the Sunday Express that attempts are underway to craft a regulatory framework to deal with cryptocurrencies, even as major financial sector regulators have signaled their “serious concerns.”

“The Prime Minister’s meeting discussed that unregulated crypto markets cannot be allowed to become avenues for money laundering and terrorist financing. The government is aware that this is an evolving technology, ”said a source.

“There was a consensus that the measures taken by the government will be progressive and forward-looking. “

Global examples of regulation and good practice were also examined. In September, China declared all cryptocurrency transactions illegal, imposing a total ban. In the same month, El Salvador authorized Bitcoin as legal tender. In most parts of the world, this market remains unregulated.

The U.S. Securities and Exchange Commission reportedly rejected rule changes that would have allowed the VanEck Bitcoin exchange-traded fund to be listed and traded on Friday.

The government believes that a cryptocurrency framework will require “global partnerships and collective strategies.”

During the meeting, there was unease with the bombardment of advertisements, both online and offline, to entice people to speculate in this market, a source said.

Recent concerns follow a huge increase in crypto investments. “Indian crores have invested over Rs 600,000 crore in crypto assets,” said an advertisement from a group of 13 members, including the Internet and Mobile Association of India, Blockchain & Crypto Assets Council (BACC), crypto exchanges and others that are part of crypto ecosystem in India.

The group said it is committed to complying with the BACC self-regulatory code of conduct. This after alarms were raised at various levels – within government, regulatory circles and leaders of the investment fraternity – about the extent of the investment exposure of Indian retail investors in this class of investors. ‘unregulated assets.

Sources said that RBI closely monitors investments flowing from the banking system to crypto exchanges and regularly obtains periodic data from banks.

The Parliamentary Standing Committee on Finance, meanwhile, convened cryptocurrency associations and industry experts on Monday for a meeting on “opportunities and challenges” in the sector.

“On crypto… we have serious concerns from a macroeconomic and financial stability perspective. How the issue should be handled – we have given our detailed suggestions to the government; As far as I know, the matter is under active government consideration and the government will decide, ”RBI Governor Shaktikanta Das said earlier this week at a Business Standard event. or at par with cash, capital market regulator SEBI has reservations about regulating them as a financial asset, sources said.

The latter reported that he had no control over the “clearing and settlement” of cryptos, and that he could not offer a matching collateral like stocks, sources said.

The question of the first definition of cryptocurrency, whether it is a currency, a commodity or a security was also highlighted.

The government suspended plans to introduce the Cryptocurrency and Official Digital Currency Regulation Bill, 2021, during the budget session as it continued discussions with stakeholders. The bill proposed to ban all private cryptocurrencies and set the regulatory framework for the launch of an “official digital currency”.

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