The Indian government is reportedly moving toward regulating bitcoin and other digital currencies as their popularity grows in the country. It is also becoming increasingly likely that authorities will not ban digital currencies in India.
According to a report today in Indian financial publication Business Standard, the Ministry of Finance, a government body that oversees taxation, financial legislation and regulation, is ‘in the process of preparing norms’ for the regulation of cryptocurrencies.
The staggering rise of bitcoin’s value, market cap and adopters has compelled the government to act, according to the report.
An unnamed official from the ministry stated:
The government feels the industry needs some government oversight and can’t be left unregulated. A panel of bureaucrats will soon submit their recommendations on the subject.
This bureaucratic panel was established this time last month by the finance ministry. An inter-disciplinary committee that consists of the central bank, India’s largest bank and representatives from other ministries, the panel will examine and propose a legal framework for digital currencies like bitcoin.
Pertinently, today’s report adds that the panel is unlikely to recommend a digital currency ban. A televised CNBC report in mid-April revealed that Indian authorities were leaning toward acknowledging bitcoin, granting it a legal status in the country with regulatory oversight by the government.
Frustrated with the cold shoulder by the Indian government thus far – India’s central bank reiterated a 2013 statement warning earlier in February to claim bitcoin companies weren’t authorized or licensed to operate – the Indian bitcoin industry has notably opted to tread the path of self-regulation.
Soon after central bank’s official notice in February, four of India’s leading bitcoin- and blockchain-related companies collaborated to establish the Digital Asset and Blockchain Foundation of India (DABFI). The body has standardized know-your-customer (KYC) and anti-money-laundering (AML) procedures as an operating model for exchanges in the country. Further, the DABFI also acts as a watchdog to warn everyday investors of possible scams and schemes abusing digital currencies in the country.
Still, regulation and, in extension, acknowledgment of bitcoin by the Indian government will be welcomed by the young but growing local bitcoin industry.
Sandeep Goenka, co-founder of Indian bitcoin exchange Zebpay stated:
Regulation will have a huge positive impact on this industry. We have recently seen that as soon as Japan legalized Bitcoin, it became the number-one country in the industry.