India Continues Struggling With Cryptocurrency Regulation

News | October 27, 2018 By:

India is at a crossroads for the adoption of cryptocurrencies. On the one hand, they are considered black market tools in that country.  On the other, an economic catalyst that could help fight poverty. The battle for the regulation of digital currencies reached the Supreme Court of India, after several petitions were filed in lower courts.

The battle for the currency is in the hands of several injunctive petitions filed with the Supreme Court of India. Exchange houses, investors and promoters of cryptocurrencies await a verdict that will decide whether to revoke the ban of the Reserve Bank of India (RBI) on the use of digital currency in the banking system, prohibit them completely , or find an intermediate point where there is regulation.

The RBI began issuing warnings about the risk of virtual currencies in 2013, but the suggestions had little effect on the massive adoption of cryptocurrencies in the country. In January, the exchanges had to suspend the subscriptions to their platforms due to the avalanche of new users wanting to enter the market. According to analyst Chris Burniske, the Indian market represents more than 10% of the international volume of bitcoin trade.

This explosion of the bitcoin trade only increased the anxiety of the government , and showed that cryptocurrencies were not a trend, but a growing industry. The concerns were legitimized by the increase of scams, cyber attacks, and theft of cryptoactives.

The reactions to these threats led to a regulatory framework that, in the end, created a temporary ban on companies linked to the country’s Central Bank. It began in November 2017 when two petitions of public interest litigation (PIL) were presented to the courts by Dwaipayan Bhowmick, Siddharth Dalmia, and Vijay Pal Dalmia demanding the regulation of cryptocurrencies. The three individuals had an interest in investing in bitcoin but did not want to see their lost money by illegal means or blocked by government measures.

A public refutation of the ban was presented by several exchanges and startups alleging that it violated the constitutional right to equality and free trade. A hearing on May 11 involving four exchange houses (CoinDCX, Coindelta, Koinex and Throughbit) expected to temporarily suspend the ban until the lawsuit ends, but the meeting was postponed until July 20.

Despite the delay, the RBI declared itself optimistic about the future of cryptocurrencies in the country:

“Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusion of the financial system. However, Virtual Currencies (VCs), also known as cryptocurrencies and crypto-active, raise concerns about consumer protection, market integrity and money laundering, among others. ”

At USD $69 million, the volume of remittances sent to India is among the highest in the world and is subject to high taxes and fees. Moving this service to cryptocurrency exchanges would make transactions quick and efficient, while boosting the economy.

The situation of cryptocurrencies in India remains stagnant. While major conferences such as the Satoshi World Summit – one of the biggest blockchain events in South Asia – were canceled this month due to regulations, online exchanges such as LocalBitcoins continue to allow the purchase, sale and trade of peer-to-peer companies. to-peer (P2P) of cryptocurrencies in foreign currencies.

This story was originally published in Spanish at Cript247.com