Indian Government may Soon Form a new Panel to Study Cryptocurrencies

The cryptocurrency market has been turbulent, to say the least, in this past week. Hot on the heels of the market’s biggest bull run came a crash that wiped out one trillion dollars in value within the span of a few days. The primary reason for this, as indicated by experts, has been the tightening of regulations around crypto trading in various parts of the world. India, one of the fastest-growing markets for cryptos, saw a total investment of 1.1 billion dollars in cryptocurrencies before the crash.

In light of all this, the Indian Government announced on 19th May that a committee of experts will be formed to conduct a thorough examination and advise the government on the regulation of cryptocurrencies. According to an official involved in this matter, former finance secretary Subhas Garg’s 2019 proposal to institute a blanket ban on cryptocurrencies is an outmoded way of dealing with the issue. The finance ministry believes that cryptos need to be looked at afresh in order to determine their position within the Indian financial system.

When formed, this committee will study blockchains and how technology can be used to spearhead progress in India. It will also advise the government on regulating cryptocurrencies by classifying them as digital assets. Furthermore, the committee may also assist the Reserve Bank of India in rolling out India’s own digital currency, called the Digital Rupee.

Sources say that the cryptocurrency trade in India has been of great interest to the finance ministry. As the crypto market in India has expanded, officials have had multiple formal as well as informal discussions with stakeholders regarding the risks associated with decentralized finance systems. Minister of State for Finance and Corporate Affairs, Anurag Thakur, has recently been in talks with banks and the crypto sector to move ahead with the formation of the committee. He is also supposed to be one of twelve or so members who will be part of this new committee.

The Finance Minister of India, Nirmala Sitharam, as well as Anurag Thakur, have maintained a mildly positive, albeit reserved, view on cryptocurrencies so far. In a media event last month, the Finance Minister said that the potential of blockchains as a promising new technology is not lost on the government and that the finance ministry does not want to shut off the usage of cryptocurrencies altogether.

However, the statement came at a time when the government had been in the process of drafting a bill that seeks to ban all cryptocurrencies and make possession of digital assets illegal. The bill, which has been written based on Subhas Garg’s recommendations, was supposed to be tabled for discussion in the parliament’s Budget Session but that did not happen for unknown reasons.

Several voices from within the crypto community in India, including the CEO of WazirX,(a major cryptocurrency exchange in India), Nischal Shetty, have been outspoken about the government’s lack of understanding regarding blockchain technology. Hence, this decision to formally examine the working of cryptocurrencies has been regarded by enthusiasts as a positive move overall.

References

1. Exclusive: India may set up new panel to study crypto regulations https://economictimes.indiatimes.com/tech/technology/govt-may-set-up-new-panel-to-study-crypto-regulations/articleshow/82746324.cms
2. Centre may constitute new panel to study cryptocurrency regulations in India: Report https://www.moneycontrol.com/news/business/centre-may-constitute-new-panel-to-study-cryptocurrency-regulations-in-india-report-6911821.html

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