Skepticism as News of Secretive India Crypto Bill Breaks
India is hit with its latest wave of speculations, as rumors of a full crypto ban emerge, yet remain unconfirmed by its reserve bank.
This article has been updated to reflect that RBI has expanded on its earlier statement regarding a blockchain system for banks.
Those who mine, trade or own cryptocurrency in India are currently on the edge of their seats, as rumors keep swirling around a draft regulation called the Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019. As its ominous title indicates, the bill allegedly calls for harsh penalties of up to 10 years in jail for those who deal in crypto, clearly intending to rid the country of digital tokens. However, whether the bill will become a law or not remains inconclusive, even after attempts of one of India’s premier blockchain lawyers to discover the truth.
April’s unveiling of a promising regulatory sandbox for blockchain by the Reserve Bank of India (RBI) contained the first hints of a crypto ban, with the rules making no mention of crypto in a thoroughly tight-lipped manner. This prompted lobbyists to call for the bank’s reconsideration, and likely fanned the flames of rumors about stricter measures inbound. These embers caught fire around the same time, when local publication The Economic Times suggested that several government departments had already agreed to the ban and were merely waiting for the correct time to announce it.
Since then, on June 28, the RBI has clarified the outline for the development of a blockchain platform for the banking sector of the country, as Cointelegraph reported. The platform, which is believed will be launching in 2020, will bring a whole host of new applications. The head of the RBI’s R&D branch stated that the platform is “for blockchain applications for the government in banking.”
Following a complete lack of guidance on the claim, Indian blockchain and cryptocurrency lawyer Varun Sethi submitted an official request for information to the RBI. The RBI’s regulatory framework for blockchain innovation, as well as its ongoing advice to investors about crypto suggests that it has the authority to make these decisions — making it a logical target for Sethi’s information request. Strangely enough, when the report was released, the RBI stated unequivocally that it hadn’t received communication from the government on the matter.
Reading between the lines
There are some things to consider before assuming that India will ban cryptocurrencies. Notably, Sethi begins each request for information with a statement from “the article” (referring to The Economic Times’ piece published on April 26), which cannot be considered a primary source when it comes to financial regulation. Another reason to be skeptical is the language that the RBI uses when answering Sethi’s inquiries. The bank won’t lie on a request for information; it says a lot when, in the clearest terms possible, it states its complete absence of knowledge and that it hadn’t sent a memo or even met internally on the matter.
To believe that India will totally ban cryptocurrency requires one to suspend logic. The country is one of the most technologically progressive, and its recent blockchain regulations are optimistic. It makes sense that India would leave cryptocurrency out of its blockchain laws, because the two ideas (while related) are completely different. Sandeep Nailwal, co-founder and chief operating officer of Matic, an Indian-based solution to Ethereum’s decentralized scaling issues, told Cointelegraph:
“There is no information from trusted sources to support the statements made in this report and it’s completely contrary to the widespread