he Indian government has clarified misinformation around prohibiting cryptocurrencies after rumors circulated of an impending ban. Here is a breakdown of the latest update on crypto regulation in India and what it means going forward.
Crypto Regulation Status
The Minister of State for Finance Pankaj Chaudhary recently updated parliament on the status of crypto regulation in India. He stated that "the government does not consider cryptocurrency illegal" and that it has no intention as of now to ban crypto assets. This directly contradicts previous reports and brings much-needed clarity to the regulatory landscape.
Clarification of Ban Rumors
Chaudhary specifically addressed rumors that the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 would impose a blanket ban on crypto in India. He clarified "the bill prohibits all private cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses." This suggests regulation rather than an outright ban remains the path forward.
Upcoming Crypto Bill
The minister reiterated that the Cryptocurrency and Regulation of Official Digital Currency Bill is still under consideration by the government. Once passed, it aims to create a facilitative framework for an official digital currency to be issued by the Reserve Bank of India. The bill will also regulate the use of crypto assets and establish a framework for crypto exchanges and service providers. However, private cryptocurrencies will not be banned, contrary to previous speculation.
Taxation but no Ban
Chaudhary underscored that the government views cryptocurrencies as assets rather than currencies. They will be taxed accordingly but will not be banned. This maintains the status quo established by the Supreme Court in early 2020 which overturned an RBI ban and recognized crypto as neither legal nor illegal in India. Going forward, the proposed legislation will look to regulate rather than abolish private digital currencies.