India May Have Cryptocurrency Market Regulation in Place by the End of 2018

The special committee created by the Indian government in November 2017 may provide the draft regulation on cryptocurrencies as soon as by the end of the year.

Quartz India reports that after a lot of debate and confusion, the special panel created by the Finance Ministry of India at the end of the last year announced that it is ready to submit a draft regulation for cryptocurrency this December. The news comes via a counter-affidavit filed by the Narendra Modi government to the supreme court in relation to the lawsuit initiated by several of cryptocurrency exchanges.

The cryptocurrency industry in India has been waiting for clear guidance from lawmakers and regulators since April 2018, when the Reserve Bank of India (RBI) effectively banned cryptocurrency trading in the country and required local banks to stop operations with crypto-related companies. In response, Indian cryptocurrency exchanges filed a petition to the supreme court against the central bank’s decision.

The court requested the government to submit a counter-affidavit and provide policy guidance in relation to digital assets within two weeks. As the policy has not yet been formulated, the government had to speed up the process of preparing the draft legislation.

"Serious efforts are going on for [the] preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology in (the) financial system and framework for digital currency in India," said the members of the committee, headed by Subhash Chandra Garg, a secretary in the department of economic affairs.

In the following weeks, the committee will hold meetings to discuss the issue and prepare the draft report for the members of the inter-ministerial committee (IMC) by next month and proceed to drafting provisions for the legislation on virtual currencies.

The Indian government postponed the adoption of cryptocurrency related legislation several times. The industry waited for a set of legal and regulatory norms to be ready by July 2018, but the authorities extended the deadline to September. The second deadline was not observed, either.

The lack of regulatory clarity and restrictive stance of the Indian authorities forced the leading Indian cryptocurrency exchange Zebpay to halt trading services in India and flee to Malta.