India Crypto Ban on Payments, Not Asset Class

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India’s crypto ban aims to ensure that digital assets are not used for payments, thus avoiding taxes, and to enable regulation of digital assets through the Securities and Exchange Board of India. The bill also provides for ways for the Reserve Bank of India to create a central bank digital currency

The Indian government’s recent legislative proposals do not seek to ban cryptocurrency outright, but rather to create a legislative framework to regulate it as security while banning it as a method of payment and promoting to the place a digital currency of the Indian Central Bank (CBDC).

The bill, entitled “Cryptocurrency & Regulation of Official Digital Currency Bill 2021” is identical to that proposed to Parliament last year in New Delhi.

“This bill actually makes it easier to allocate a budget for the creation of a fiat cryptocurrency called the digital rupee and creates the infrastructure required for mass adoption and use in the country just like China, ”Harsh Rajat, founder of the Ethereum push notification service, explained to Blockworks.

“However, there is no general ban on other currencies. The RBI wants the digital rupee to have an important place in the Indian economy.

One difference between this year and last year is that lawmakers know a lot more about crypto, tweeted Nischal Shetty, CEO of WazirX, an Indian crypto exchange.

-Don’t believe there will be a blanket ban on crypto-Clarity on classification of crypto matters-Lawmakers understand crypto much better now than a year ago

Nischal Shetty, WazirX on CNBC-TV18

– db (@ tier10k) November 24, 2021

Mikkel Morch, director of digital asset hedge fund ARK36, said in an emailed statement that “an outright ban on such investments could be difficult to implement as the digital asset ecosystem in India s ‘extends far beyond cryptocurrencies and includes other investment assets such as NFTs which are becoming increasingly popular in India.

In a discussion thread, Sino Global Capital pointed out that the law is vague and ambiguous, so it’s not entirely clear what is meant by “private cryptocurrency” – which would be prohibited under one interpretation of the law Project.

“There is no clear definition of what private cryptocurrencies are. The bill will have to define the same. It can mean one of 3 or a totally new definition,” Sino Global tweeted.

This final interpretation is highly unlikely given the government’s understanding that retail investors have invested nearly $ 6.6 billion in the sector. The industry also directly and indirectly employs 50,000 people. The government understands international regulations.

– Sino Global Capital (@SinoGlobalCap) November 23, 2021

The fund does not believe these are all blockchain-based digital assets except one created by the Indian government.

This interpretation is “highly unlikely given that the government understands that retail investors have invested nearly $ 6.6 billion in the sector.” The industry also directly and indirectly employs 50,000 people, ”they tweeted.

But, the content of the bill is also subject to change throughout the legislative parliament on the basis of contributions from the parliamentary committee made up of members of the opposition parties.

“It is also important to note that this is what the government thinks the law should be and is by no means the final form of the law. It must be debated and adopted by parliament to become law, ”they concluded.

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Sam reynolds

Blockworks

Journalist

Sam Reynolds is a Taipei-based journalist covering digital assets and regulation across Asia. Prior to joining Blockworks, he was an editor at Forkast News and an analyst at IDC.

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