The Indian Government Confirms It Will Not Block Crypto, Instead It Will Regulate It

The Indian government will not ban crypto but will regulate the sector. (photo credit: pixabay)

JAKARTA - According to reports from local media, the Indian government will not outright ban crypto. On the contrary, they will regulate this sector.

On November 23, Cointelegraph reported that the Indian government is considering a bill proposing the creation of an official digital currency while imposing a ban on all “private” cryptocurrencies.

The news, which surfaced on Cointelegraph, sparked panic selling on local crypto exchange WazirX the following day. The unclear wording of the bill and the lack of clarification from the government have left many observers divided on the prospects for crypto in India.

However, Indian news outlet NDTV reported on December 2 that they had obtained details of cabinet records circulating in the government regarding the proposed crypto bill.

NDTV reporter Sunil Prabhu said the note contained suggestions for regulating cryptocurrencies as crypto assets, with the Securities and Exchange Board of India (SEBI) overseeing local crypto exchange regulations.

According to Prabhu, as quoted by Cointelegraph, investors will be given a specific time frame to declare their crypto holdings and will have to transfer them to an exchange regulated by SEBI, which indicates that private wallets can be banned. He added that this was part of the government's push to prevent money laundering and terrorism financing.

Prabhu also said that the government would delay its plans for a central digital bank currency (CBDC) with the Reserve Bank of India (RBI) while focusing on the crypto sector. It would not allow any crypto assets to be recognized as legal currency or tender, which suggests that the rules aim to provide a clear distinction between the two.

“[Cryptocurrencies] as legal tender will not be accepted. It's clearly not. I think that's what even the prime minister in his deliberations at the meeting became very clear about to make sure that doesn't happen", Prabhu said, quoted by Cointelegraph.

“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 that will happen at a different time”, he added.

The report from NDTV has been warmly welcomed by some Indian crypto investors. Redditor “ultron290196” posted on the r/cryptocurrency subreddit expressing relief at potentially no longer having to worry about outright bans.

“It seems that our Indian crypto movement was noticed by the government and they have finally decided to regulate Cryptocurrencies as Crypto "Assets" and not be recognized as legal tender. [...] Overall, this is a sigh of relief for us Indians. I'd rather pay taxes than be an outcast", they said.

Not everyone is happy with the details with the words “No-Incident-8718”, “this is the result. Not using hard wallets, just exchanging wallets. Also, only use Indian exchanges.