An Indian government official has claimed that two ministries and the Reserve Bank of India are actively working on a legal framework to ban cryptocurrencies on the subcontinent.
According to a Aug. 4 report from Indian news website Moneycontrol, authorities in India are making preparations to pass a law banning cryptocurrency trading. The site quoted an anonymous official as saying that consultations between the Ministry of Electronics and Information Technology, the Ministry of Law and Justice, and the Reserve Bank of India (RBI) had begun regarding the framework of such a law.
“Once Parliament resumes for the session, we are hoping to get [the law] ratified,” the official said. Parliament is expected to reconvene in late August or early September.
The official stated that the government was considering banning crypto through legislative change — rather than methods such as the blanket ban from the RBI for banks dealing with crypto firms — because it would be more binding. “It will clearly define the illegality of the trade,” the person said.
Laws on cryptocurrencies
In March, the Supreme Court of India struck down a blanket ban on banks dealing with crypto businesses, which had been imposed by the RBI since July 2018. The repeal led to a boom in new exchanges across the country.
However, government officials have been floating the idea of enacting a new law not allowing cryptocurrencies in India in place of the RBI ban.
Ashish Singhal, founder and CEO of Indian cryptocurrency exchange CoinSwitch, said that the chance the government would impose a blanket ban on digital currencies had been more likely in 2019 than this year. He said there has been a change in the way crypto is perceived across India, hopefully for the better.
Crypto refuge during lockdown
Though many parts of India still face some restrictions on movement due to the pandemic since a lockdown was ordered in March, crypto exchanges in the country reported strong growth as some investors moved away from traditional assets.
Cointelegraph reported in May that India-based exchange CoinDCX had ten times the average number of users sign up in the week after the RBI ban was lifted and 47% growth for Q1 2020. Trading platform WazirX also recorded a month-on-month growth of over 80% in both March and April. U.S.-based crypto exchange Coinbase entered the Indian market, offering crypto-to-crypto conversions and trading services from April.
Moneycontrol said that “millions of dollars worth of business in cryptocurrency is being done every week, with the lockdown pushing up the volumes.”
“A growing number of investors have found refuge in virtual currencies as traditional assets have taken a beating over worries about the health of the economy battered by the coronavirus outbreak.”