As India works on the bill to regulate cryptocurrencies, each government department has its own opinion on whether to ban the use of crypto, including bitcoin. The Finance Ministry, the Reserve Bank of India (RBI), the Income Tax Department, and the Special Investigation Team have voiced their opinions on the upcoming bill.
No Consensus Among Regulators
India is preparing a bill on the regulation of cryptocurrency. “The bill has been drafted and consultation has been started with the concerned agency,” the Navbharat Times reported last week. The news outlet quoted sources explaining that the regulators are divided on whether to ban the use of cryptocurrencies such as bitcoin.
“The finance ministry is in favor of regulating [cryptocurrency],” sources said. The Income Tax Department, on the contrary, is not in favor of regulation, the news outlet conveyed, and quoted sources explaining:
The regulation of virtual currency is almost impossible and it promotes the use of black money.
The RBI “is also not in favor of banning virtual currencies,” but sources pointed out that “the current form of the bill proposes to ban virtual currency businesses.” However, there may be exemptions for “issuing crypto tokens in exchange for assets.”
Meanwhile, the Indian Special Investigation Team (SIT) “wants to ban the use of bitcoins” after discovering at least four cases where the digital currency was used to pay for drugs, the Sunday Guardian reported. The SIT comprises of officials from the Narcotics Control Bureau (NCB), the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI) and the Income Tax Department.
The SIT has previously asked the ED, NCB and the Income Tax Department “to take adequate measures to prevent the use of cryptocurrencies,” the publication noted, adding that the Team “has called for a second round of meetings to be held in Delhi next month, where the officials from all the aforementioned agencies will review the use of cryptocurrencies.”
Experts Say Crypto Ban Not Very Feasible
The debate is also taking place in the private sector. Sarvesh Tyagi, a Delhi-based cyber law expert, told the Sunday Guardian that “it is doubtful that the SIT will succeed in banning the use of cryptocurrencies. Ban is not a solution. We need a regulatory authority.” She elaborated:
A blanket ban on the use of cryptocurrencies is not a very feasible solution as drug smuggling is a big problem, and in most cases, these transactions have nothing to do with use of cryptocurrencies.
Crypto Businesses Fight Back
The RBI announced earlier this month for banks and payment gateways under its control to stop providing services to businesses dealing in cryptocurrencies. “Banks have already sent notices to exchanges,” Sathvik Vishwanath, CEO of a leading Indian exchange Unocoin, told news.Bitcoin.com.
The RBI allows banks “about 3 months of time to end the relationships” with crypto businesses, he noted, adding that crypto companies “will be attempting to challenge the [RBI] order” in the Supreme Court as a consortium.
One company, Kali Digital Eco-Systems, has already appealed to the High Court in Delhi against the recent RBI crackdown. The company is behind the upcoming crypto exchange called Coinrecoil.
On Sunday, the company announced that Delhi High Court has accepted its petition against the Indian regulators, adding that:
Hon’ble High Court of Delhi has issued a notice to the Reserve Bank of India, the Union of India through Secretary, Ministry of Finance and GST Council. The next hearing in this case is on May 24, 2018.
What do you think of the Indian regulators’ divided opinions on how to regulate cryptocurrencies? Let us know in the comments section below.
Images courtesy of Shutterstock and the Indian government.
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Author: Kevin Helms