Back in April, we received word that the RBI, India’s central bank, was moving effectively to ban cryptocurrency usage throughout the country. More specifically, the RBI sought a blanket ban by way of asking banks in India not to accept or facilitate purchases of cryptocurrency, as of April 5. As you may have expected, this decision was met with a fairly swift backlash, and it became apparent before long that the RBI was not, in fact, relying on new or original research in establishing this policy.
Nevertheless, the effects of a piece of news like this on cryptocurrency, both in India and around the world, can be profound, and the RBI certainly didn’t do any favors to mainstream digital currencies. While the request that banks do away with cryptocurrency purchases did not go as far as establishing a new legal reality, it opened the door to that possibility. And as it was put by an Irish online platform for various online activities that can involve digital payments, currencies must comply with local financial law, which does apply to cryptocurrency dealings. Thus, had the RBI gone further and worked with the government to form a true cryptocurrency ban, Indians interested in this sort of asset would have been out of luck.
Fortunately, that didn’t happen. However, we have recently begun to hear about a different bit of news where Indian cryptocurrency regulation is concerned, and it may be better news than what some expected. This news begins with reports that a government panel has apparently decided against any kind of wide ban in favor of more strategic and manageable restrictions. Instead, the panel will recommend allowing cryptocurrency with some guidelines in the form of regulations.
We don’t know yet what those regulations would be, and it’s important to note that these reports have not been thoroughly substantiated. However, it also didn’t come about at random, or out of the blue. The Indian government had previously put together a committee (led by the Minister of Finance) effectively to decide what to do about cryptocurrency. And it’s conceivable that the RBI’s recommendation to banks spurred more government action on the topic.
Cryptocurrency advocates or even owners might frown upon this news. But increasingly in recent months regulation has begun to be viewed as a good thing. Once upon a time, it represented almost a loss of freedom for cryptocurrency, or at least seemed to. Now, however, regulation may be necessary if cryptocurrency is to be sustained on a large scale. The more it’s being adopted around the world, the more governments and financial institutions need to take note, and the more regulation begins to make sense. Whatever the case, it’s certainly a favorable alternative to what the RBI had previously attempted in India.