Indian ranks 2nd in Chainalysis’s report on Global Crypto Adoption Index. As such, the union government’s decision on cryptocurrency regulation was keenly sought all over the world. Contrary to previous notions, the government of India is not looking forward to putting a ban on crypto, but will likely anoint SEBI, the national capital markets regulator, with the charge of overseeing digital assets. In addition, crypto owners may need to declare their assets as per the latest regulations.
India Crypto Ban: The MeitY Strategy on Blockchain and Crypto
The Ministry of Electronics and Information Technology published an extensive strategy report elaborating the Indian government’s approach towards cryptocurrency and blockchain reports.
The 52-page report describes the government’s vision “to create trusted digital platforms through shared Blockchain infrastructure; promoting research and development, innovation, technology, and application development; and facilitating state of the art, transparent secure and trusted digital service delivery to citizens and businesses, thus making India a global leader in blockchain technology.”
The report also explains how India is looking forward to incorporating the benefits of blockchain and collaborating with multiple organizations in a secure and trusted environment that adheres to integrity and regulatory compliance.
A National Blockchain Framework
The government is likely to create the foundation of an NBF, in cooperation with participants from the three categories- App Developers, Tech Providers or Operators(IT, Blockchain-as-a-Service), and comprehensive tech stack builders (IP creators).
The government accepts applications for multi-institutional models for constructing the NBF. The report also encourages innovation and agility, along with the participation of start-ups. The blockchain infrastructure would also integrate several multiple national-grade services, including digital signature (eSign), identification (ePramaan), DigiLocker, and many more. The framework will likely be hosted across geographically distributed nodes, and organizations looking forward to participating in the NBF will require security clearance from empanelled agencies after audit and assessment.
A Government-issued Crypto Wallet Platform for Trading
The report mentioned a “Government crypto wallet platform for selling, buying and trading” in the list of potential applications. This simple indication is enough to understand the government’s stance towards cryptocurrencies.
As stated above, the government is not likely to ban cryptocurrencies. But, it will probably try to make efforts for better regulation and tracking. On one hand, this is good for the crypto community- proponents have been wanting a bit of government regulation as it helps in increasing trust and consequent crypto adoption. Noted blockchain pioneer and PayBito Chief Raj Chowdhury had previously spoken about the need for a balance between CBDC and cryptocurrency. It is a known fact that RBI, the country’s central bank, is undergoing R&D for the launch of the Digital Rupee.
India Crypto Ban: Impact on Crypto Exchanges and Blockchain Development Companies
The government’s stance acknowledging the importance is very beneficial for businesses and enterprises looking to utilize blockchain technology. The list contains several implementation cases for blockchain. While opportunities are plenty, the government is likely to prefer trustworthy names in the business.
Cryptocurrency exchanges on the other hand will face additional regulation. This, however, is a relief for crypto investors wondering whether to hold on to their investments or to panic sell.
The Indian government’s stance provides a boost to businesses and enterprises looking forward to securing leverage with blockchain and cryptocurrencies. There may be a regulatory body and some debate regarding the categorization of cryptocurrencies into financial assets or securities. However, there are no indications of a crypto ban in India.