Reports are emerging that India’s government may be reconsidering its stance on cryptocurrencies with the formation of a new regulatory panel.
A May 19 report in the Economic Times, cited three sources privy to discussion on the formation of a fresh panel of experts with a view to regulating cryptocurrency trading in India.
The move comes amid increasing support for overturning recommendations made by a committee led by former finance secretary Subhash Garg in 2019 for a blanket ban on crypto assets on the grounds they have become outdated.
The report quoted an unnamed official with knowledge of the matter who stated:
“There is a view within the government that the recommendations made by the Subhash Garg are dated and a fresh look is needed at use of cryptos rather than a total ban,”
The new panel may be used to investigate the use of blockchain for technological enhancement and suggest ways to regulate crypto assets separately to fia currencies. It may also work closely with the Reserve Bank of India on any proposed digital Rupee project.
Minister of State for Finance and Corporate Affairs, Anurag Thakur, may be considered to join the new committee according to the report. Thakur and Finance minister Nirmala Sitharaman have both previously stated that the government would prefer to take a calibrated approach to regulation for crypto assets rather than impose an outright ban.
The RBI had banned all banks from allowing customers to trade in cryptocurrency in 2018, however, this was overturned by the Supreme Court in February 2020 following a petition filed by Indian fintech entrepreneurs and experts.
There have been many reports that a blanket ban would be reimposed with an anonymous source claiming to be a senior Indian Finance Ministry official claiming such earlier this year.
The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 was scheduled to be addressed in parliament in March but it was deferred for reasons not made public, the Economic Times report added.
Sitharaman is expected to be briefed by her team later this month regarding ongoing developments in the cryptocurrency space and collective breaths are being held again in Indian crypto industry circles.
There has been massive momentum on crypto exchanges and sustained retail demand in India in recent months despite the ever-present regulatory fears.