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Most countries have already opted to regulate their cryptocurrency industry by enacting new laws to govern the nascent sector. But if recent reports are to be believed, it appears that India might be bucking the trends as the South Asian nation could be on the verge imposing a total ban in digital currencies trading.
India is planning to introduce a new law that would ban cryptocurrency trading in the country, The Economic Times reported. This was confirmed by “people familiar with the development” who requested to remain anonymous due to “rules on speaking with the media.”
The sources claim that the bill is about to be discussed by the federal cabinet. After this discussion, it will then be sent to parliament for approval.
While the federal government is bent on banning cryptocurrency trading, it wants to encourage blockchain, the technology behind digital currencies such as Bitcoin and Ethereum, according to Coindesk. The government wants to explore blockchain’s potential uses such as its application in land records management, educational certificates record keeping, and supply chain management of pharmaceutical drugs.
At the moment, a spokesman from India’s finance ministry did not respond to confirm or deny the report. Should the ban push through, however, India’s move would be out of step with the approach of other Asian countries which opted to regulate their crypto markets.
India’s cryptocurrency industry has been facing regulatory uncertainty lately. In 2018, the Reserve Bank of India (RBI) issued a circular banning crypto trading.
In response to the RBI circular, crypto exchanges filed a suit with the Supreme Court to challenge the crypto trading ban. The SC sided with the crypto industry and overturned RBI’s ban in March of 2020.
After the Supreme Court’s crypto-friendly ruling, the country’s cryptocurrency market grew at a frantic pace. For instance, Mumbai-based crypto exchange WazirX, a Mumbai based crypto exchanger grew 400% in March 2020 and 270% in April 2020. Meanwhile, Paxful grew by 883 percent from $2.2 million in January to $22.1 million by May 2020.
Many are clamoring for the government to regulate the crypto market instead of imposing a total ban on trading. “India can actually benefit from such a regulation to attract cryptocurrency investors and businesses,” Khaitan & Co partner Sanjay Khan said.
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