For some time now, India has not been able to deal with crypto regulation.
However, according to a recent report by the Indian government itself, cryptocurrencies seem to be viewed with new optimism.
The report comes from the Steering Committee on Fintech issues and has been presented to the Minister of Finance. The report has 150 pages, with a section dedicated to digital currencies and tokens, and aims to take stock of developments in the global fintech sector, so as to examine the regulatory climate and use cases to suggest institutional regulatory updates that allow financial and technological innovation in the country.
The report reads:
“Use of digital tokens resolves the issue of multiple currencies, improves liquidity and capital compliance costs, allows for micro-payments and expedites the payment process, which further eliminates liquidity risks. […] The mechanisms surrounding cryptocurrencies, particularly the blockchain and initial coin offerings (ICOs), are revolutionizing the global fintech landscape”.
The report further explores the operation of ICOs in particular, defining them as an innovative way of raising capital by fintech companies.
Previously, another report had been prepared by an Inter-ministerial Committee (IMC) to study all the aspects of cryptocurrencies and to provide recommendations to the government in this regard. This other report was titled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019”.
The curious thing is that both the IMC that produced this previous report and the Steering Committee that produced the new one are headed by the same person, Subhash Chandra Garg. In addition, other members of the IMC are also members of the Steering Committee.
The new relationship also distinguishes between utility tokens and security tokens, suggesting that they should be regulated differently.
The previous report, on the other hand, did not make any distinction and suggested banning all private cryptocurrencies, except those issued by the State.
Furthermore, he acknowledged that technological innovations, including virtual currencies and cryptographic tokens, have the potential to improve the efficiency and inclusiveness of the financial system, but he concluded that they should be banned.