While the state of crypto in India is unclear, many groups are calling out for regulation instead of a ban. The Centre for Internet and Society (CIS) recently stated that the Indian Govt. should avoid such a drastic step of a blanket ban on crypto.
CIS has released a report regarding the classification of crypto. According to them, instead of a blanket ban, the Indian Government should “classify crypto-assets under the existing financial framework”. They’ve also said to give the jurisdiction of crypto assets to existing financial regulators, like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI).
This report comes at a time when the Indian Govt. is planning to introduce the cryptocurrency bill. When passed, the bill is more likely to ban most private cryptocurrencies. However, the description of ‘private cryptocurrencies’ remains ambiguous. Besides this, reports suggest that this process is most likely to delay several weeks.
According to the report, an interim solution is to reiterate crypto as not legal tender. The Indian Government should classify crypto-assets as derivatives to grant SEBI jurisdiction. By doing so, the regulator could make its existing know-your-customer and anti-money laundering rules for crypto exchanges.
Looking at long-term measures, the report recommends a “specific and standalone regulatory framework”. Moreover, it strongly points to a specific regulatory structure for stablecoins, one held to a higher standard than crypto assets.
On the other hand, the report states that regulation should only apply to crypto-assets, not the underlying technology. Furthermore, the report adds that doing so will allow for further innovation.