Report: India to ban cryptocurrencies as a payment method but regulate them as an asset
The Modi government will also ban the active solicitation of crypto companies, in relation to advertisements.
India will ban the use of cryptocurrencies to make payments, but will allow and regulate the trading of cryptocurrencies as assets, the Economic Times reported citing government sources.
The government plans to present a draft Crypto Regulation Law at the winter session of parliament, the details of which are being finalized. The bill appears to have reversed course from previous plans to ban cryptocurrencies in the country.
In the bill, authorities will also ban “active solicitation” from crypto companies, including exchanges and platforms, ET reported.
The issue of advertising has sparked a “great debate,” with some thinking that ads mislead young people, Tanvi Ratna, founder and CEO of think tank Policy 4.0, told CoinDesk.
Crypto exchanges WazirX and Bitbins have stopped their ads, ET reported as well. A WazirX spokesperson told CoinDesk that the exchange stopped advertising in August, adding that the ET headline is misleading, while CoinDCX declined to comment on the report.
The government held a meeting with representatives of the crypto industry on Monday, adding to a series of closed-door discussions between the government and the Reserve Bank of India (RBI) that have taken place in recent days.
“The regulation of cryptocurrencies as an asset does not solve all the problems that concern the authorities, but it takes them out of the field of the currency, which is one of RBI’s concerns,” said Ratna.
“The trickiest part is defining the asset class,” he said, adding that current discussions to regulate cryptocurrencies as a commodity don’t fit in well. But other RBI concerns are more difficult to resolve, such as financial stability, capital controls and currency risk, Ratna noted.
Price arbitrage has emerged as a new concern, ET also reported Wednesday, citing anonymous sources. Authorities are concerned about how a regulator could control multiple exchanges “when there is a large price difference and an opportunity for price arbitrage,” according to one of the sources.
Exchanges are pushing for a regulatory sandbox to adjust regulations, according to the report. India’s Securities and Exchange Board could be appointed as the regulator, but a “final call” has not been taken on this issue, the report added.
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