Indian Official Proposes Ban On “Private Cryptocurrencies”

News, Regulation | November 1, 2018 By:

The government of India is considering a blanket ban on the use of “private cryptocurrencies,” according to a report published by the Indian government press center.

During the 19th meeting of the Financial Stability and Development Council (FSDC) under the chairmanship of finance minister Arun Jaitley, senior government and financial regulation officials discussed “the issues and challenges” of cryptocurrencies in India.

Subhash Chandra Garg, secretary of the Department of Economic Affairs (DEA), proposed that the council come up with an “appropriate legal framework to ban use of private cryptocurrencies in India.”

While the regulatory framework for the ban is currently unclear, the statement suggests that the use of major cryptocurrencies like bitcoin and ethereum would be banned. Crypto Kanoon, a platform engaged in regulatory analysis and raising legal awareness about cryptocurrencies in India, said that the potential ban could extend to trading and its application as a payment instrument, but not necessarily the possession of cryptocurrency.

At the meeting, the council also discussed a plan to “encourage” the use of distributed ledger technology (DLT).

Nischal Shetty, founder of WazirX, said that if regulators are to promote DLT, then it has to be public DLT which involves crypto.

“I’m sure the people in the committee are smart enough to understand that DLT without crypto is not possible in public domain since that would make it a very inefficient database and it’s only meant for private companies to use for their own personal growth,” Shetty said. “Public cannot participate in such cases which means millions of young and old Indians who believe in crypto will be cheated off the opportunity to invest in this asset class. My belief is that they mean to say public DLT will be encouraged and if that’s the case then crypto assets will be involved and used.”

The meeting was held shortly after the Indian Supreme Court asked the government to clarify its position on cryptocurrency. The court requested officials to file an affidavit regarding the matter by mid-November.