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SC order on cryptocurrency will offer only temporary relief

Representational image. File

Representational image. File   | Photo Credit: AFP

Government’s draft law proposes to ban private currencies

Even as virtual currency investors and businesses welcomed the Supreme Court’s order on cryptocurrency, the relief for such players may be only temporary given that the Centre, in a draft law, has proposed to ban all private cryptocurrencies.

“... Our main objective is to create a dialogue with policymakers and develop a comprehensive framework for crypto assets in India paving the way for innovation,” said, Sohail Merchant, CEO, Pocketbits.in, and member of IAMAI’s Blockchain and Cryptocurrency Committee. “As an industry body, we look forward to a more open dialogue with the government.” IAMAI was among entities that had approached the Supreme Court in 2018 over the RBI circular prohibiting regulated entities from “providing any service in relation to virtual currencies, including those of transfer or receipt of money in accounts relating to the purchase or sale of virtual currencies.”

Welcoming the order, industry body Nasscom tweeted, “We believe that banning #tech is not the solution, a risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens.”

Noting that the government’s draft framework for regulating the cryptocurrencies proposes to ban all cryptocurrencies outright except a state-issued one, Rachit Sharma, DGM, Taxmann, said the Supreme Court’s order could be a temporary relief for the investors and intermediaries.

He added the Centre may introduce the bill in the Parliament to permanently ban the cryptocurrencies and to set up the basic infrastructure required to issue state-owned cryptocurrency and the digital rupee.

“Until then, all intermediaries and banks, which were forced to shut down platforms providing the trading of cryptocurrencies, are free to operate in India,” Mr. Sharma said.

G.V. Anand Bhushan, partner, Shardul Amarchand Mangaldas & Co., added the challenge ahead will be to strike a balance between innovation and the need to regulate these newer technologies which are not always used for lawful activities.

L. Viswanathan, partner, Cyril Amarchand Mangaldas, said the RBI may reconsider its approach to cryptocurrency and come up with a calibrated framework that deals with the reality of these technological advancements, given that even central banks across the world were issuing their own cryptocurrencies.

“We are quite excited about the ban being lifted, which is a much-awaited relief for us and the entire crypto community. It’s such a morale booster and will definitely help us bring back the high-volume traders who were concerned about the tips involved in our P2P transaction system, and have been unable to transact small amounts....we are confident that this verdict would give rise to a greater ecosystem in a country where innovation has always had a place, and rope in new investors, better support for blockchain-based projects, and eventually, create more jobs in India” said Gaurav Dahake, CEO, Bitbns, a cryptocurreny exchange.

Likewise, Zac Cheah, CEO, Pundi X said, “The Apex Court of India lifting the ban on crypto only reinforces the fact that crypto and blockchain are the technologies of the future... India is the second largest user of Pundi X’s blockchain wallet... allowing cryptocurrency transactions will increase our user base and will bring more and more consumers into the fold of digital payments.”

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Printable version | Jul 13, 2020 1:59:27 PM | https://www.thehindu.com/business/sc-order-on-cryptocurrency-will-offer-only-temporary-relief/article30984157.ece

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