Thinking cryptocurrency to be a significant risk to India’s payments system, the Reserve Bank of India (RBI) announced a ban on cryptocurrency in 2018 but very recently the Supreme Court of India turned down the Central Bank’s ban on trading in virtual currencies. It is expected that India’s digital asset industry along with fintech and technology industries will be benefited with the decision. The decision is supposed to lead India to increase innovation in blockchain technology and digital assets. India has a challenge in law enforcement and the country has a bitter experience about cryptocurrency but even then it accepted that. The law of India is fully unrelated to cryptocurrency is a challenge. Considering these factors, the central bank put a ban on cryptocurrency first.
Scamming is a big impediment
So far we know, police arrested 18 people in Navi Mumbai back in 2017 for organizing an OneCoin recruitment event and the incident led to the recovery of $4 million in nine bank accounts whereas $11 million was transferred before the authorities were able to seize it. Some other scamming issues came to sight of authority and the decision of central bank of banning cryptocurrency followed by those incidents. With the decision, the RBI shut down all services relating to cryptocurrency.
But the decision of Supreme Court is poising to make new rules for cryptocurrency that will be nuanced and well designed. But hence there are some other causes for what the decision is good news among those pieces of good news one is crypto industry doesn’t have to worry about a patchwork of state-by-state laws as we have to in the U.S. The Securities and Exchange Board of India (SEBI) is more likely to take a nuanced approach to treating mainstream, decentralized digital assets like Bitcoin and Ethereum in a different manner from fly-by-night coins can be an implication whereas another implication can be having a single market regulator for both equity-like-tokens and commodity-like-tokens to lower regulatory confusion. SEBI needs to pay huge effort to make a better decision.
RBI still has the authority to restrict all banks from providing service from crypto to fiat but European countries and U.K. have recently started unlocking these fiat bridges to crypto exchanges on a case-to-case basis and India will soon follow their footstep. The primary social function of cryptocurrency would be better to finance the development of Web3. It is expected that the decision of Supreme Court unlock all the significant source of financing for India’s blockchain technology startups.
Wait for a new Dawn
The crypto community needs to engage with the RBI, the SEBI and the central government to create a favorable and sustainable environment for crypto that accelerates innovation while also protecting customers. Major crypto companies have entirely withdrawn from India in the last three years and this is the actual time to them to bring themselves back to the country again.