Indian Government Actively Working On a New Law Banning Cryptocurrencies
August 5, 2020 11:49 am
Only after five months, the Indian courts lifted the blanket ban on crypto, an Indian government official announced that two ministries and the Reserve Bank of India are actively working on a legal framework considering a new law banning cryptocurrencies.
On August 4, per the report, from Indian news website Moneycontrol, authorities in India are initiating preparations to pass a law banning cryptocurrency trading. The site quoted an anonymous official as stating that consultations between the Ministry of Electronics and Information Technology, the Ministry of Law and Justice, and the Reserve Bank of India had begun regarding the framework of such a law. The official stated:
“We are working on it. After inter-ministerial consultations, it (the note) would be presented to the cabinet for approval. Once Parliament resumes for the session, we are hoping to get it ratified”
Also, the official said 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.
Ban On Digital Currencies
The Supreme Court of India struck down a blanket ban on banks dealing with crypto businesses in March, that had been imposed by the RBI since July 2018. The repeal led to a boom in new exchanges across the country. Though, government officials have been hovering the idea of enacting a new law not supporting cryptocurrencies in India in place of the RBI ban.
Ashish Singhal, founder and CEO of Indian cryptocurrency exchange CoinSwitch, announced that the chances that the government would impose a blanket ban on digital currencies were more likely in 2019 than this year. He told there has been a difference in the way crypto is perceived across India, probably for the better.
Crypto refuge during the lockdown
Due to the pandemic, since a lockdown was ordered in March, many parts of India still face some restrictions on movement. Crypto exchanges in the country reported strong growth as some investors moved away from traditional assets.
In May, a report that India-based exchange CoinDCX had ten times the average number of users sign up in the week after the RBI ban was lifted as well as 47% growth for Q1 2020. Trading platform WazirX also recorded month-on-month growth of over 80% in both March and April.
Additionally, United States-based crypto exchange Coinbase entered the Indian market, offering crypto-to-crypto conversions and trading services from April onward.
Moneycontrol declared 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.”