According to the latest development, the Indian government has called upon lawyers of the firm Nishith Desai Associates to put forward suggestions for accommodating for Bitcoin and cryptocurrency regulations in India.
This move comes shortly after the lawyers representing Internet and Mobile Association of India [IAMAI] filed an appeal to the Supreme Court against the circular by the Reserve Bank of India [RBI] that called for a ban on all kinds of financial dealings and involvement with the digital asset.
The document was put forward by three lawyers of the firm constituting recommendations for structuring the cryptocurrency regulations. Lawyer Jaideep Reddy, representing IAMAI, and one of the writers of the framework that proposed regulations, to a news outlet, said:
“Our submission was responded to by the Finance Ministry which was kind enough to invite us to present our suggestions. The presentation mainly consisted of us explaining the suggestions made in the paper. They listened to our proposals with interest.”
Referring history to be the greatest teacher, the submitted document has urged to establish proper regulations and not imposing a ban on the new technology. The paper stated:
“An outright ban on crypto-asset activity should not be considered for several reasons.”
Some of the suggestions in the paper to regulate the digital asset’s activity included- incorporating new rules under the existing laws, categorizing digital currency into three types due to their uniqueness in nature – Payment tokens, Security tokens [regulated by SEBI] and Utility tokens.
The paper also emphasized introducing know your customer (KYC) and anti-money laundering (AML) regimes. It stated:
“Trading activity with regard to all other crypto-assets falls in something of a regulatory vacuum, although existing laws like the Consumer Protection Act continue to apply to a significant extent.”
This crucial development emerged at a time after the Indian government responded to an RTI filed by a news outlet on December 13, 2018, seeking the legal state of Bitcoin and other cryptocurrencies, wherein the Ministry of Finance answered a few questions in a Lok Sabha session stating that the government is in its final stages of drafting the regulations.
Arun Jaitley, Minister of Finance and Corporate Affairs stated that the government will not recognize the digital asset as a legitimate tender, almost a year ago. The panel that was set up in 2017, has failed to come up with any clarity and has continuously delayed in suggesting a mechanism in dealing and trading with cryptocurrency for a great deal of time.