Regulatory changes in the crypto market could either make investors panic or it can also make them even more confident regarding the industry. This was actually the story of 2018 for the entire crypto industry as we all watched Bitcoin slide from almost $20,000 to what it is today at around $6,300.
As for India, the country’s Supreme Court chose not to lift the ban on crypto exchanges dealing with banks. However, in yet another twist in this saga, it seems that the Indian government isn’t actually completely taking out the crypto industry.
A government official mentioned to Quartz that “I don’t think anyone is really thinking of banning it (cryptocurrencies) altogether. The issue here is about regulating the trade and we need to know where the money is coming from. Allowing it as (a) commodity may let us better regulate trade and so that is being looked at”.
The US Securities and Exchange Commission already classified both Bitcoin and Ethereum as commodities. Will this be the same approach that will be done by the Indian government or will there be a blanket classification on all cryptos that these should be considered commodities?
Draft Regulations Underway
According to Subash Chandra Garg who works as the joint secretary in the department of economic affairs and head of the cryptocurrency panel, the draft is expected to be done around the first two weeks of July.
There are a number of legitimate concerns regarding cryptocurrencies. The committee is concerned regarding the possibility of money laundering and other illicit activities.
Shubham Yadav, who is the co-founder of Coindelta which is a Pune-based crypto exchange, mentioned that “though cryptocurrencies belong to a new class of financial assets, we can still welcome them as commodities and not currencies because of their high volatile prices”. He also added that “many countries have been already going in this direction, including the US”.
A former RBI Deputy governor R Gandhi said that “if these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved”.
And cryptocurrencies are truly risky in nature. Last month, Bitcoin lost around 70% of its all-time value in December 2017. And even if there are those prominent cryptocurrency figures throwing their prediction regarding the future of Bitcoin, it remains to be seen if it is going to be bullish or not.
Accepting More Scrutiny
The good thing is that Indian crypto companies are open towards having more scrutiny. These businesses have claimed that know-your-customer, as well as anti-money laundering guidelines, are all set. Yadav mentioned that they are ready to work with the government and even help them to formulate a regulatory framework that can be applied to the industry. He also said that “we can help them in designing a monitoring system for blockchain where it can remotely monitor all transactions”.
If this is true, this can be a good move. In fact, the European Parliament released a report recently saying that it’s a mistake to ban cryptos completely.