India likely to bar cryptocurrencies for transactions, allow them to be held as assets: Report
According to people acquainted with the government's thinking, this method would avoid enforcing a total ban. However, the government remained adamant about preventing crypto companies, including exchanges and platforms, from aggressively seeking new investors.
India is likely to prohibit the use of cryptocurrencies for transactions or payments. Still, according to the Economic Times, it would allow them to be retained as assets like gold, stocks, or bonds. According to people acquainted with the government's thinking, this method would avoid enforcing a total ban. However, the government remained adamant about preventing crypto companies, including exchanges and platforms, from aggressively seeking new investors. To gain acceptance and avoid a ban, the crypto community has made repeated requests to Indian authorities that it be classified as an asset rather than a currency.
According to sources, Prime Minister Narendra Modi held a meeting last week to debate the future of cryptocurrencies amid worries that unregulated crypto marketplaces might become conduits for money laundering and terror financing. According to a source familiar with the talks at that meeting, the overwhelming opinion inside government is that efforts taken should be proactive, "progressive, and forward-thinking," since cryptocurrencies are an emerging technology.
According to sources, the contents of a bill are still being worked out, and the cabinet might get the proposed legislation in the next two to three weeks for consideration. As per the reports, India's Securities and Exchange Board might be named as the regulator, though this has not been finalised. The Reserve Bank of India has been extremely hesitant to accept cryptocurrencies, citing possible threats to macroeconomic and financial stability, as well as capital controls.
At an event on Tuesday, RBI Governor Shaktikanta Das repeated the central bank's worries, saying there was a need for deeper conversations and stressing the lack of a well-informed public debate. Meanwhile, the world's nations have differing perspectives on cryptocurrency. Cryptocurrencies have been outlawed in China. Cryptocurrencies have been embraced in El Salvador and Cuba. Many countries are exploring the idea of creating their own digital money.
China, Japan, Sweden, and Nigeria are all experimenting with digital currencies issued by central banks. Similar tests are planned by the Bank of England and the European Central Bank. The US Federal Reserve is also considering such a move, but has not made a definite decision on whether or not to go forward with it.