2017 Early : Cryptocurrencies steadily gaining attraction. The price of Bitcoin shoots up from around $5 at the start of 2012 to almost $1,000 in early 2017. Cryptocurrency was gaining huge popularity in India.
2017 End : Two PILs are filed in the Supreme Court, one asking it to ban buying and selling cryptocurrencies in India, the other asking for them to be regulated.
· In November, the government forms a committee to study issues around virtual currencies and propose actions.
· In December, Bitcoin price was recorded at it all time high around $20000(12-14 lacs). This fuelled a boom in trade and a rise in the number of investors in India
· The RBI and the Ministry of Finance issue statements on cryptocurrencies. The ministry compares them to ponzi schemes.
They issue more such statements but the status quo remains.
2018 April : India's central bank has announced a ban on the sale or purchase of crypto-currency.
· Suddenly, everything changes. The RBI issues a circular preventing commercial and co-operative banks, payments banks, small finance banks, NBFCs and payment system providers from:
o Dealing in virtual currencies
o Providing services to all entities which deal with them
o This isn't the first time the RBI has expressed its discomfort about cryptocurrency and its usage in India
· Crypto exchanges, unable to access banking services in India, find their businesses devitalized overnight. This period also sees cryptocurrency exchanges mushroom in India, including Zebpay, Coinsecure, Unocoin, Koinex and Pocket Bits.
· In its first policy statement for the current fiscal year, the bank said that financial institutions can no longer deal with entities that trade in virtual currencies such as Bitcoin.
The Reserve Bank of India (RBI) has given banks three months to unwind their exposure to such exchanges.
There are around five million digital currency users in India.
"In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling [virtual currencies]," the bank said in a statement.
The RBI's announcement has left crypto-currency exchanges in India in turmoil.
"No other player in India was foreseeing this, and it comes as a shock. People are trying to exit as they feel they won't be able to cash out after three months
"Selling volumes in Bitcoin are as high as 1.5 times in a single day and the price has gone down by 10% of what it should ideally be."
2018 May : Faced with an existential threat, several exchanges filed a write petition in the Supreme Court.
2019 July: The committee submits its report, recommending a ban on “private cryptocurrencies” in India.
“Minister of State for Finance and Corporate Affairs Anurag Thakur said the government hasn't prohibited cryptocurrency in the country
A draft bill for banning cryptocurrency has been in the works for some time with Economic Affairs Secretary Subhash Chandra Garg leading the exercise”
Draft Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019
· Highlights of the Bill
o The draft Bill seeks to prohibit mining, holding, selling, trade, issuance, disposal or use of cryptocurrency in the country. Cryptocurrency is defined as any information, code, or token which has a digital representation of value and has utility in a business activity, or acts as a store of value, or a unit of account.
o Under the draft Bill, mining, holding, selling, issuing, transferring or use of cryptocurrency is punishable with a fine or imprisonment of up to 10 years, or both.
o A person must declare and dispose of any cryptocurrency in his possession, within 90 days from the commencement of the Act.
o The draft Bill permits the use of processes or technology underlying any cryptocurrency for experiment, research, or teaching.
o The central government, in consultation with the RBI, may issue digital rupee as legal tender. The RBI may also notify a digital currency recognised as legal tender in a foreign jurisdiction, as a foreign currency.
2020 March : Hope at last. The Supreme Court strikes down RBI’s banking ban on crypto, terming the April 6 circular unconstitutional. One of the SC’s reasons for overturning the ban is that cryptocurrencies are unregulated but not illegal in India. A decaying crypto market is jolted back to life.
· Exchanges see a sharp increase in interest as the SC ruling coincides with a crypto boom. The price of Bitcoin jumps more than 700% between April 2020 and February 2021. However rumours of an impending ban persist.
2021 Jan : The government says it will introduce a bill to create a sovereign digital currency and simultaneously ban all private cryptocurrencies. The recently-revived industry realises it faces a second existential threat.
“The bill seeks to prohibit all private cryptocurrencies in India. However, it would allow certain exceptions to promote the underlying technology of cryptocurrency and its uses,” the government says"
2021 March : NEW DELHI/MUMBAI (Reuters) - India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class.
· The bill, one of the world’s strictest policies against cryptocurrencies, would criminalise possession, issuance, mining, trading and transferring crypto-assets, said the official, who has direct knowledge of the plan.
· The bill would give holders of cryptocurrencies up to six months to liquidate, after which penalties will be levied, said the official.
· Some bankers apparently had asked the agency (NPCI) to block crypto transactions on its network, the paper reported. Instead, the agency told banks they should consult their legal and compliance departments on whether they should block transactions on their own systems.
2021 April : Bitcoin Again making new All Time High, This time around 65000$ more than 3x from the previous ATH (All time high) Dec 2017.
2021 June : Indian Government May Regulate Crypto as Asset Class, under the purview of the Securities and Exchange Board of India (SEBI)
Indian Government Reportedly Considers Regulating Crypto as an Asset Class
The Indian government has yet to introduce a cryptocurrency bill. An existing bill seeks to ban cryptocurrencies. However, there have been reports of the government re-evaluating the recommendations within the bill.
The New Indian Express reported Friday that top sources tracking the crypto industry told it that “the government has moved away from its earlier hostile stance towards virtual currencies and will most likely classify bitcoin as an asset class in India soon.” The publication further conveyed:
Market regulator Securities and Exchange Board of India (SEBI) will oversee regulations for the cryptocurrency sector after bitcoin’s classification as an asset class.
The media previously reported that the Indian government will set up a panel of experts to come up with new recommendations to oversee the cryptocurrency industry in India. Sources informed the publication that an expert panel at the Ministry of Finance is working on formulating the country’s cryptocurrency policy. The publication further conveyed:
A cryptocurrency regulation bill is likely to be tabled in the Parliament during the Monsoon session.
The Monsoon session usually starts in July. However, last year, it did not start until September due to the coronavirus crisis. This year, the government expects the session to begin on its normal schedule.
Last week, India’s central bank, the Reserve Bank of India (RBI), issued a notice to banks regarding its April 2018 circular that banned financial institutions from providing services to crypto businesses and traders. The bank said that the circular is no longer valid per the supreme court ruling in March last year, emphasizing that banks cannot quote it when making decisions on cryptocurrency.
The central bank, however, reiterated that its position on bitcoin and other cryptocurrencies has not changed and it still has “major concerns,” RBI Governor Shakthikanta Das said, adding that they have been communicated to the finance ministry.
Ketan Surana, Director and chief financial officer of cryptocurrency exchange Coinsbit and member of Internet and Mobile Association of India (IAMAI), said: “We can definitely say that the new committee which is working on cryptocurrencies is very optimistic on cryptocurrency regulation and legislation.” The director emphasized:
A new draft proposal will soon be in the Cabinet, which will look into the overall scenario and take the best step forward. We are very hopeful that the government will embrace cryptocurrencies and blockchain technologies.
What will happen next ?
"Future is uncertain, however i believe Crypto will have positive response in near future"
To be continued…
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.