India’s proposed ban on ‘private cryptocurrencies’ apparently misinterpreted

Is India looking to ban “private cryptocurrencies”… or not? The messaging around crypto in the world’s sixth biggest economy has been a bit confusing lately.

Reports surfaced last week that India would likely be allowing the trading and holding of crypto assets, but would look to ban their usage as a means of payment.

Media focus earlier this week, however, seemed to be on the latter, helping to fuel a FUD-spreading “India is banning crypto” narrative on Twitter and sending crypto prices plummeting in India once again.

https://twitter.com/braindrainomar/status/1463569059249901582

Will India do a China and look to impose a blanket ban on all interaction with non-government-issued cryptocurrencies? Unlikely.

Not saying it’s not possible, of course – Indian PM Narendra Modi did reveal a particularly cautious view of crypto at the Sydney Dialogue summit last week. And the Indian government has also made it clear this week that it has no plans to recognise Bitcoin as a currency.

But that’s hardly surprising, seeing as the Reserve Bank of India is working on a phased introduction of its central bank digital currency (CBDC), planning a pilot test in 2022.

Indian crypto bill’s creator speaks out

The creator of India’s current crypto bill (up for consideration and review by the Indian parliament), however, has now clarified that “it is misleading to say that private cryptocurrencies will be banned”.

While also emphasising the potential of the crypto and blockchain industry, the former finance secretary of India Subhash Garg said in an interview today with an Indian news channel:

“[The description of the crypto bill] was perhaps a mistake. It is misleading to say that private cryptocurrencies will be banned and to intimate the government about the same.”

The Indian crypto bill was first drafted by Garg in 2019, so it’s fair to say it might actually need a bit of an update.

“First of all, I am not so sure whether the Crypto Bill is expected any day,” said Garg. “The bill has still not been formulated. It has not been considered by the Cabinet and therefore I have even doubts whether this bill will get introduced.”

No ban but regulation will come up in the newly reworked #CryptoBill in india 🇮🇳

— Sapna Singh (@earnwithsapna) November 30, 2021

Garg inferred that he believes the Indian government should look to review the bill and rework a new one after discussing it with stakeholders and crypto investors. And he also believes there needs to be greater clarification around what the word “private” stands for in “private cryptocurrencies”, as well as how to classify crypto as “assets”.

“You don’t classify the wheat that you produce, you don’t classify the clothes you produce, as assets,” said Garg. “That is too much of oversimplification to treat this as an asset.”

Although there’s clearly much to sort out regarding the regulation of crypto in India (where isn’t there?), the upshot of all this is that the fears of draconian measures and a blanket private-crypto ban look to be misplaced at this stage.