Indian Government Panel Suggests New Legal Framework for Cryptocurrencies

Last month, the Indian government appointed a panel tasked with formulating recommendations regarding the regulation of cryptocurrencies.

According to a new report by Indian media outlet CNBC TV18, the panel submitted the report to India’s Minister of Finance on December 7.

The panel’s report suggests a new legal framework for cryptocurrencies.

The report has not been made public. As such, its actual contents remain unknown.

The result of this is a stream of speculations from industry experts on what it may contain.

However, the report by CNBC TV18 appears to shed some light on the panel’s recommendations.

The media outlet quoted several anonymous sources close to the matter. One source stated that one recommendation that the Indian government considers is framing a new law for the regulation of the cryptocurrency space.

The goal of the new framework would be to end the speculation on cryptocurrencies such as Bitcoin.

Additionally, the sources claim that the panel suggests a government-backed cryptocurrency to be proposed at a later date—a development that was introduced earlier this year.

What We Know So Far

Subhash Chandra Garg, who is secretary of the Department of Economic Affairs, is the chairperson of the panel.

The panel is the result of the Indian government’s goal to formulate a regulatory draft for the cryptocurrency domain after years of ambiguity.

India’s Ministry of Finance tasked the panel to come up with guidelines and regulatory norms for domestic virtual currency trading and the blockchain sector.

This development surfaced in a counter-affidavit that the Indian government filed in a Supreme Court case.

The case saw India’s cryptocurrency exchange industry challenge the ban enforced by the Central Bank of India earlier this year.

The institution had enforced a ban that bars banks from offering services to cryptocurrency exchanges.

This ongoing ban has significantly affected the cryptocurrency industry in India, even leading to the closure of major trading platforms.

The government’s counter-affidavit revealed that there were ongoing efforts to prepare a draft report and draft bill on cryptocurrencies.

As such, it is safe to assume that the panel’s report will contain a legal framework for virtual currencies.

Possible Ban of Cryptocurrencies

Another quote from anonymous sources states that the legal framework will entail banning cryptocurrencies and treating related dealings as illegal.

This has led to several media outlets explicitly using the word “ban” in their reports on the development.

It is worth noting that this is not the first time news of a cryptocurrency ban in India has surfaced.

The Indian government has been considering a ban on virtual currencies for quite some time now. This has led to considerable misinterpretations of government-related statements.

Reputable media houses have created similar speculations in the past which have turned out to be wrong.

There is a high probability that the report does not stipulate an explicit ban on cryptocurrency, which would require parliamentary approval and take a long route to become law.

Sharing this sentiment is Nischal Shetty, the CEO of the Indian crypto exchange Wazirx. Shetty has been campaigning on Twitter for the Indian government to formulate favorable regulations for the virtual currency sector.