Indian Crypto Bill committee Chairman against total ban

05/14/2021

Subhash Chandra Garg, the former finance secretary, who resigned from his government position in July 2019, headed the inter-ministerial committee (IMC) that drafted the cryptocurrency bill entitled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.”

However, earlier this year, Subhash Garg said that when he drafted the crypto bill, cryptocurrencies were competing with India’s national currency, and crypto assets were not prominent at the time. Now, he believes that cryptocurrencies should not be banned.

Background

At one point in time, there was a ban put in place that essentially meant that crypto-related businesses could not operate and have access to banking services across India. The result of this was that several firms shut down, or had to move their operations abroad. The ban was eventually lifted.

Subsequently, the Indian government planned to introduce the crypto bill in the Budget session of parliament, which however ended with no such bill being introduced. Since then, Indian Finance Minister Nirmala Sitharaman had said that the government might not ban cryptocurrency entirely and leave an area for research in this field. Earlier last year, the Supreme Court of India had lifted the ban on crypto put by the Reserve Bank of India.

Taking a Stand

The comments by Chandra were first made during a recent virtual conference in which he explained why the government should develop a proper regulatory framework for the industry as well as a better understanding on the government’s part.

“I don’t think we still have full clarity and understanding about how to regulate cryptocurrencies…Regulate, control cryptocurrencies but allow the crypto assets, encourage the crypto services,” he said.

He also touched on cryptocurrencies in a recent post on his blog in which he explained why the Indian government must take action now to regularize the industry. He made reference to the recent sale of an NFT for $70 million and explained that with the current growth of the crypto industry, its worth could very well eclipse India’s GDP.

He also referenced the growth of initial coin offerings as a capital-raising effort for crypto companies and said that Indian companies will likely get into the space as well. While he acknowledged the issues that regulators might have with cryptocurrency, Chandra stated that the current growth rate is too big to ignore and that the government would do well to regulate the industry as crypto assets will inevitably appear on more and more companies’ balance sheets.

He called out institutions like the MCA and ICAI and advised them to set up proper standards for the reporting and treatment of crypto-related transactions as soon as possible. Finally, he touched on the possibility of a Central Bank digital currency stating that they are growing in popularity and should also be looked into.

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