The Indian government will not move for a straight up crypto ban, but will instead regulate the sector, local news media reports.
Last month, the Indian government was weighing a bill proposal for the creation of an official digital currency while imposing a ban on all “private” cryptocurrencies.
The news caused panic sell activity on local crypto exchange WazirX the following day, and the vague wording on the bill and lack of clarification from the government have since left many onlookers divided on the prospects for crypto in India.
Local news outlet NDTV reported that it had obtained details of a cabinet note circulating in the government regarding the proposed crypto bill.
According to NDTV reporter Sunil Prabhu, the note contained suggestions to regulate cryptocurrencies as crypto assets, with the Securities and Exchange Board of India (SEBI) overseeing the regulation of local crypto exchanges.
Investors will be given a certain time frame to declare their crypto holdings and must transfer them to exchanges regulated by SEBI, which suggests that private wallets may be banned, the reporter said. He added that this is part of a push from the government to prevent money laundering and terrorism financing.
Prabhu also said that the government will put its plans for a central digital bank currency (CBDC) with the Reserve Bank of India (RBI) on hold while it focuses on the crypto sector. It will not allow any crypto assets to be recognized as currencies or legal tender, suggesting that it is aiming to provide a clear distinction between the two:“[Crypto] as a legal tender will not be accepted. That is a clear no. I think that that is what even the prime minister in his deliberations at that meeting made absolutely clear to ensure that does not take place.
I think they will do it [CBDC] as a standalone virtual currency for the RBI at a later stage, so you can definitely expect a virtual currency soon, but it will take place at a different time.”
The reports from NDTV have been welcomed by some Indian crypto investors. Redditor “ultron290196” posted in r/cryptocurrency subreddit expressing relief at potentially no longer having to worry about an outright ban. “It seems our Indian crypto movement is getting noticed by the government and they’re finally deciding to regulate Cryptocurrency as Crypto “Assets” and not recognized as legal tender. […] All in all, it’s a sigh of relief for us Indian folks. I’d rather pay some tax than become an outcast.”
Not everyone was as excited with the details with “No-Incident-8718” writing: “Here’s the catch. No use of hard wallets, only exchange wallets. Also, only using Indian exchanges.”