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Reserve Bank of India Says Cryptocurrencies are “Negative” and Don’t Provide Anything New to The Economy

India’s Tax Department Issues Notices to Digital Currency Users

The Reserve Bank of India will not even bother to study the possibility of testing the impact of crypto and similar virtual tokens on the development of a new regulatory framework for fintechs.

In a document entitled “Draft Enabling Framework for Regulatory Sandbox,” India’s leading financial authority explains that it studied several recent technologies, but stressed that crypto currencies, ICOs and other services based on blockchain technologies were counterproductive for the country’s economy.

An indicative negative list of products/services/technology which may not be accepted for testing is as follows:

– Credit registry

– Credit information

– Crypto currency/Crypto assets services

– Trading/investing/settling in crypto assets

– Initial Coin Offerings, etc.

– Chain marketing services

– Any product/services which have been banned by the regulators/Government of India

The explanation of the criteria of the RBI seeks to protect
the legacy techs and services. The RBI mentions that according to its view,
crypto currencies bring nothing new to the country’s financial system, so they
do not deserve to be taken into account by the regulatory sandbox:

The entities may not be suitable for RS if the proposed financial service is similar to those that are already being offered in India unless the applicants can show that either a different technology is being gainfully applied or the same technology is being applied in a more efficient and effective manner.

India Never Liked Crypto

As reported by Ethereum World News, the government of India has exerted excessive pressure to prevent the use of crypto currencies in the country. Recently, the Indian Exchanges Coindelta and Zebpay had to close unexpectedly due to the extreme constrains from the RBI

Similarly, earlier in the year, a series of threats from private banks to customers who had been identified as crypto users were reported in social media. According to multiple users, their accounts were being closed without notice.

In India, there is still no law expressly prohibiting the use of cryptocurrencies, but the government has exerted so much pressure on users that – despite the judgement of the country’s courts – cryptos are virtually banned.

The post Reserve Bank of India Says Cryptocurrencies are “Negative” and Don’t Provide Anything New to The Economy appeared first on Ethereum World News.

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Law Commission of India Recognizes Cryptocurrency as Means of Electronic Payment

The Law Commission of India has recognized cryptocurrency as a means of electronic payment. The pronouncement came during the Commission’s recent feasibility study of the legality of online gambling in the country. Cryptocurrency enthusiasts in India will most likely welcome this news given the negative view held by many government officials towards virtual currencies.

Law Commission Groups Cryptocurrency with Electronic Payment Channels

According to a report issued by the Law Commission:

Gambling transactions should be made cashless, making use of electronic means of payment such as credit cards, debit cards, net-banking, virtual currencies (VC, or cryptocurrency), etc.

The idea of cryptocurrencies gaining any form of recognition is one that appeals to crypto enthusiasts in the country. Commenting on the ruling, Nischal Shetty, the CEO of WazirX, a local cryptocurrency exchange platform said:

It is the first time that a body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction. Therefore, it is a very positive sign, especially considering the report has come out after a lot of deliberation.

Presently, virtual currency regulation is a significant topic in India. The Reserve Bank of India (RBI), the country’s apex bank, has prohibited local banks from facilitating cryptocurrency transactions in the country. This situation has led to a public outcry with multiple suits filed to challenge the RBI ban.

The Supreme court after having heard preliminary arguments on the case recently fixed September 11, 2018, as the date for delivering its decision on the matter.

Regulation is Better than Prohibition

The ruling offered by the Law Commission of India throws into sharp relief an important debate of which is more desirable – regulation or prohibition. The Commission’s mandate was the examine the case for legalizing betting while treating match-fixing as a criminal offense.

The same principle could also be applied to the government’s stance on cryptocurrency and the RBI ban. Commenting on this analogy, Tuhina Joshi, an associate at TRA Law, a firm with many cryptocurrency exchange platform clients, said:

The law commission recommends that regulating gambling is preferable to an outright ban. This is the same argument we are making in [the] context of cryptocurrencies.

Do you think the ruling of the Indian law commission will lead to a reversal of the RBI ban? Let us know your thoughts in the comment section below.

Image courtesy of the Law Commission of India

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