Another major headline in the crypto land coming from India says that the country is not looking forward to putting a blanket ban on cryptocurrency. The development comes across as a contradiction to the circular passed by the central bank last week on July 6th, banning the use of cryptocurrencies in all the financial transactions.
A panel set up by the authorities to study the virtual currencies suggested they be treated as commodities. Treading on the similar path as the United States of America, India might give cryptocurrencies the status of a new sort of financial asset. A reliable inside source shed light on the matter saying nobody is thinking of banning cryptocurrencies altogether. The issue that the country and the courts are after is regulating the trade. The financial regulators of the nation need to know where the money is coming from, in order to regulate trade. Allowing cryptocurrencies as a commodity may just let them do exactly that.
The main concern of the government regarding the cryptocurrencies is the tremendous number of scams and illicit activities, and the role played by these pseudo currencies in them. Giving them the status of a commodity might help the government in its regulation and bringing down the level of illegal trade and money laundering.
A top government official has accepted that trade is not a criminal offense. Most Indians trade in various asset classes in the stock market and cryptocurrency could just be another asset class. He agreed that there needs to be a mechanism in place to make sure that only legal money is used in trading. Tracking the source of the money is the primary concern of the government.
According to Shubham Yadav, founder of Coindelta, cryptocurrencies are not being accepted as mainstream currency because of their “highly volatile” nature. The former deputy governor of the Reserve Bank of India, R. Gandhi, also seconds the idea that digital currencies should be treated as only commodities.
Gandhi said, “If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”
After a long spell of uncertainty, status of a new financial asset is also being welcomed by the proponents of the digital currency in India. Positive regulations from India could definitely boost the cryptocurrency market big time.