India Might Announce Guidelines on Digital Currency before September
Call it a coincidence or otherwise. The Indian government is planning to come out with guidelines on the emerging cryptocurrency sector before September in the current year. Significantly, the Supreme Court has fixed September 11 as the next or final hearing for disposing of petitions filed by digital coin exchanges against the Reserve Bank of India’s April circular. The government position is a key factor in delivering the judgment, and the apex court could naturally expect to see its response.
Draft Is Ready
A senior official from the Indian finance ministry told the media that the draft guidelines for cryptocurrency are ready and that consultation is going on with those concerned stakeholders. This included the RBI, Securities and Exchange Board of India (SEBI) and the Internet and Mobile Association of India (IAMAI). The consultations will lead to the draft getting a final shape. Therefore, the finance ministry expects the final guidelines to be ready before September. Any guidelines will naturally have its impact on the petitions before the apex court.
An interdisciplinary committee was established with Economic Affairs’ Special Secretary holding the chairmanship position to find out the regulatory guidelines on cryptocurrency. The finance ministry official indicated that both the RBI and the SEBI have reservations on some clauses contained in the initial draft. The ministry also stated that it is a new phenomenon and that governments throughout the world are still struggling to cope up with it. However, there is unanimity about the serious reservations against the digital currency.
Therefore, the concerned stakeholders are trying to reach a common conclusion that will lead to a proper mechanism to regulate the cryptocurrency as a whole. The government was compelled to constitute a committee after the IAMAI approached the apex court that sought a stay of the central bank. Though the Supreme Court has not acceded to that request, it sought the RBI response within three weeks.
The matter was heard by on Friday, there were little arguments as the court, and the plaintiffs have agreed to the postponement of the case to September 11. During the brief arguments, the RBI told the apex court that any dealings in the digital currency would only boost unlawful activities or transactions. Therefore, the banking regulator is keen to remain extremely cautious and wants to protect investors’ interests.
Incorporation of Views
As per the finance ministry official, “The government is yet to get a detailed response from the RBI and SEBI in this regard, and as soon as it comes, it will incorporate the views in the draft.” Though some of the developed economies are encouraging virtual assets, the sector is facing increased surveillance from the regulators. Apart from this, there is ambiguity in classifying them.
The RBI’s concerns are more or less similar to that of other regulators in the world. In its April 5 circular, the central bank pointed out on the consumer protection, money laundering and market integrity due to such crypto coins. Though the circular was issued in April, the RBI ban came into force only on July 6.